Kingdom of Morocco

Office of Vocational Training

and the Promotion of Labor

PracticalWorkManual

Sector: Administration, Management & Commerce.

Program: Specialized Technician in Business Management (STBM)

Module: Management Control 2

Budget management & Dashboard

July 2013

HR Director, Tertiary CDC

OFPPT
Skills Partner
Documentpreparedby:

Nom et prénom EFP DR

YAQINE YOUNES ISGI KHOURIBGA CT

Documentvalidatedby:

Nom et prénom Entity/EFP Direction

KAMILI LATIFA Tertiary CDC HRD

Dear Friend Tertiary CDC HRD

AGLAGALE MOHAMED Tertiary CDC HRD

Acknowledgements.

The HRD / The TERTIARY CDC thanks all the people who participated in the development
Why a practical work manual.

N.B.:

The users of this document are invited to communicate with the HR department / TERTIARY CDC
all remarks and suggestions in order to take them into account for enrichment
and the improvement of the content.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 2 of 88
 Preamble

A hand without the head that directs it is a blind instrument;

the head without the hand that acts remains powerless
Claude Bernard

Practical Work is a training method that allows for the application of

theoretical knowledge, most of the time by doing exercises, case studies,
simulations, role-playing games, interactive revelations… The goal of this manual is an introduction
to the acquisition of the basic techniques for highlighting transfers and the
techniques implemented at the course session level and adapt the materials
educational based on the techniques studied.

Each class session is divided into two parts:

- a theoretical part that we recall the main points to be addressed,

- a practical part that includes at least two practical work sessions to be carried out by the trainees for credit

individually or in small groups.

The subjects addressed here are totally interdependent and present a complexity.
growing. It is therefore highly recommended to ensure continuous presence. Any absence will have
prejudice to the understanding of future sessions.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 3 of 88
 Module Sheet

Module Time mass: 80H

Management control part II:
Budget Management and Dashboard

Objective of the Module Develop the cash budget

Analyze the gaps
Centralize the indicators in the dashboard

Sequences Mass
Schedule

Sequence No. Title

Sales and commercial expense budgeting

1 10h

2 Production scheduling and budgeting 5h

The budgeting of supplies and the rational management of

3 10h
stocks

4 Investment budgeting 10h

5 The general cash budget and the projected summary statements 25 hours

6 Development of a dashboard 3 PM

Note: 5 hours are dedicated to the evaluations of the module.

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 4 of 88
 Sequence sheet No. 1

Module Budget management and dashboard Hourly mass: 80 h

Sales and commercial expense budgeting
Sequence No. 1 Scheduled time: 10 a.m.

Objective of the sequence Establish the sales and commercial expenses budget

Theoretical part
Points to address
1 The tools and techniques for sales forecasting
2 The presentation of the sales budgets and commercial expenses
3 The forecast of selling expenses

TP Practical part
Targeted objectives: Practice sales forecasting methods (Moving averages;
Adjustment; Seasonal coefficients
Estimated duration: 60 minutes
Execution of TP1: Individual work
Statement:
Based in Khouribga, the company RAPIDO offers a home catering service (delivery of
cold or hot dishes). Statistical observation has shown that demand has a character
Seasonal. The sales of the last four quarters are summarized in the table below:
Sales statistics:
N-3 N-2 N-1 N
Quarter 1 655 745 885 1,045
Quarter 2 664 1,060 1 195 1 665
Quarter 3 1,000 1 255 1,565 1 990
Quarter 4 735 895 1,085 1,475
WORK TO BE DONE:
1 1. Calculate the centered moving averages.
2. Calculate the seasonal coefficients, defined as the ratio of sales to the averages
mobiles. Use these coefficients to calculate the sales generated from the variations.
seasonal.
3. Calculate the least squares line fitting equation for the series.
4. Similarly, calculate the equation of a fit of the series by an exponential function.
5. Based on an adjustment by an exponential function, forecast the demand.
for each quarter of the year N+1.
6. Can we use exponential smoothing technique to make the forecast?

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 5 of 88
 Correction of TP1:
1.
é é = ( é + é à + é )

é é = ( é + é à + é )

And so on...
Period (quarter) Sales Moving averages
1 655
2 664
3 1,000 774 75
4 735 835.50
5 745 916.88
6 1,060 968,75
7 1 255 1,006.25
8 895 1 040,63
9 885 1,096.25
10 1 195 1,158.75
11 1,565 1 202.50
12 1,085 1,281.25
13 1 045 1,393.13
14 1,665 1,495.00
15 1,990
16 1,475

The moving average series shows the acceleration of sales growth during the recent periods.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 6 of 88
 2.
The seasonal coefficients are calculated by the ratio of sales to moving averages. The average coefficients
calculated are adjusted so that their sum of coefficients equals 4.
Calculation of the coefficients for each quarter

Quarter Sales Moving averages Coefficients (a)

1 655
2 664
3 1,000 774.75 1,291
4 735 835.50 0.880
5 745 916.88 0.813
6 1,060 968.75 1,094
7 1 255 1 006,25 1,247
8 895 1 040,63 0.860
9 885 1,096.25 0.807
10 1,195 1,158.75 1,031
11 1,565 1 202.50 1,301
12 1,085 1,281.25 0.847
13 1,045 1,393.13 0.750
14 1,665 1 495,00 1,114
15 1,990
16 1,475

Calculation of average coefficients

Average of Coefficients
N-3 N-2 N-1 N
coefficients adjusted

Quarter 1 0.813 0.807 0.750 0.790 0.788

Quarter 2 1,094 1,031 1,114 1,080 1,077
Quarter 3 1,291 247 1,301 1,280 1,276
Quarter 4 0.880 0.860 0.847 0.862 0.859
Total 4,012 4,000

4
×
4,012

Calculation of seasonally adjusted sales

é
é é =

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 7 of 88
 Quarter Sales Coefficient Seasonally adjusted sales
1 655 0.788 831.22
2 664 1,077 616,53
3 1 000 1,276 783.70
4 735 0.86 854.65
5 745 0.788 945.43
6 1,060 1,077 984.22
7 1 255 1,276 983 54
8 895 0.86 1,040.70
9 885 0.788 1,123.10
10 1,195 1,077 1,109.56
11 1 565 1,276 1 226,49
12 1,085 0.86 1,261.63
13 1,045 0.788 1,326.14
14 1 665 1,077 1,545.96
15 1,990 1,276 1 559,56
16 1,475 0.86 1,715.12
3.
Choice of a fitting model
Linear regression by least squares
Calculation of the trend line
Trend line
xI yI x i yi xi2
1 831.22 831.22 1.00
2 616.53 1,233.06 4.00
3 783.70 2,351.10 9.00
4 854,65 3,418.61 16.00
5 945.43 4,727.16 25.00
6 984.22 5,905.29 36.00
7 983.54 6 884,80 49,00
8 1,040.70 8,325.58 64.00
9 1,123.10 10,107.87 81.00
10 1,109.56 11,095.64 100.00
11 1 226,49 13 491,38 121.00
12 1,261.63 15,139.53 144.00
13 1 326,14 17,239.85 169.00
14 1,545.96 21 643,45 196,00
15 1 559,56 23,393.42 225,00
16 1,715.12 27,441.86 256,00
136 17 907,55 173,229.82 1 496,00

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 8 of 88
 136
x= = ,
16
17,907.55
y= = ,
16

xi yi− nxy 173,229.82− (16 × 8,50 × 1 119,22)

a= = = ,
x2i− nx 2 1,496− (16 × 8.502 )

b = y− ax = 1 119.22− 61,81 × 8,50 = ,

4.

Adjustment by an exponential function (y = b.a)X)

We return to a linear adjustment by changing variables: Y = log(y), A = log(a) and B = log(b)

y = b.ax log(y) = log(b) + x.log(a) Y = Ax + B

Calculation of the adjustment Y = Ax + B

xi yi Y = log⁡(yI ) xi× log⁡(yi ) xi2

1 831.22 2 920 2,920 1
2 616,53 2,790 5,580 4
3 783.70 2,894 8,682 9
4 854.65 2,932 11,727 16
5 945.43 2,976 14,878 25
6 984.22 2,993 17,959 36
7 983.54 2,993 20,950 49
8 1,040.70 3,017 24,139 64
9 1 123,10 3,050 27,454 81
10 1,109.56 3,045 30,452 100
11 1 226,49 3,089 33,975 121
12 1 261,63 3,101 37,211 144
13 1,326.14 3,123 40,594 169
14 1 545,96 3,189 44,649 196
15 1,559.56 3,193 47,895 225
16 1,715.12 3,234 51,749 256
136 48,539 420,812 1,496

136
x= = ,
16

48,539
Y= = ,
16

xI Y−i nxY 420,812− (16 × 8,50 × 3,034)

A= 2 2
= = , a = 100.024= ,
xI− nx 1,496− (16 × 8.502 )

B = Y− Ax = 3,034− 0,024 × 8,50 = , b = 10 2.83

=

= . = × ,

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 9 of 88
 5.

Sales forecast for year N

The forecast is made in two steps:

forecast of the seasonally adjusted data by extrapolating the identified trend;

seasonalization of the forecast: seasonalized forecast = trend forecast x seasonal coefficient

xi y = b.aX Seasonal forecast

Quarter 1 17 1 734,69 1,366.94 (a)
Quarter 2 18 1 833,57 1,974.75 (b)
Trimester 3 19 1,938.08 2 472,99
Quarter 4 20 2,048.55 1,759.70

(a) 1 734,69 x 0,788 = 1 366,94

(b) 1 833,57 x 1,077 = 1 974,75

6.

Exponential smoothing
Exponential smoothing is not suitable for sales forecasting when the trend is upward as we
We have observed it in the previous questions.

Target objectives: Practice of sales forecasting methods (Moving averages - Coefficients

seasonal workers
Estimated duration: 60 minutes
Course of the TP2: Individual work
Statement:
The company PARFUMOR SA is a small business specialized in the production of bottles.
perfume.
Studies show that the sales of the company's products are subject to certain seasonality.
Mr. MOUDAFFAR, management controller, asks you to study the revenue of the
company over the last four years, in order to forecast bottle sales and plan production.

Evolution of sales and moving averages

Year Quarter Turnover in KDh Moving average of order 4
T1 10000 -
T2 5,000 -
N-4
T3 3,500 7 887,50
2
T4 13,000 7962.50
T1 10100 7962,50
T2 5,500 8150,00
N-3
T3 3,000 8,512.50
T4 15,000 8637,50
T1 11,000 8 737,50
T2 5600 8,950.00
N-2
T3 3,700 9112,50
T4 16000 9156.25
T1 11300
T2 5650
N-1
T3 4000 -
T4 16562 -

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 10 of 88
 WORK TO DO

1. Calculate the centered moving average of order 4 for the year N-1.
2. Represent on the same graph the observed sales figures as well as the moving average.
What do you observe?
3. Determine the parameters of the trend line of quarterly revenue and the line
of the moving average trend. Calculate the respective correlation coefficients. What about
Are you concluding?
4. In a summary note of about ten lines intended for Mr. MOUDAFFAR, present the
smoothing technique using the moving average method, its purpose and its limitations.
5. Determine the relationships to the trend, the ratio between the observed data and the moving averages.
adjusted.
6. Calculate the seasonal coefficients and deseasonalize the sales revenue series.
observed.
7. Calculate the average and the standard deviation of the series of observed data and data
seasonally adjusted.
8. Determine the quarterly revenues N.

Correction of TP2:

1. Calculation of moving averages of the deseasonalized series

Year Rank Sales Moving averages

13 11,300.00 9,200.00 (1)
14 5,650.00 9,307.75
N-1
15 4,000.00
16 16 562,00

(1) 9200 = (3700/2 + 16 000 + 11 300 + 5 650 + 4 000/2)/4

2. Graphical representation

Comments: The series (sales) is marked by seasonal variations. The decline in sales to
The 2nd and 3rd quarters are visible. Growth appears steady. It is therefore logical to make a
forecast by correcting the time series of seasonal variations and then making a
linear adjustment on the trend.

3. Trend line and seasonal coefficients

Line equation CA: y = ax + b avec a = 191 ; b = 7058,5 ; Corrélation =

0.191440154

CDC Tertiary Manuel TP: management control 2: Budget management & TB Page 11 of 88
 Equation line Moving averages: y = ax + b with a = 144,5507 ; b = 7402,6941 ;
Correlation = 0.98262

Parameters of the trend line of revenue: y = 191x + 7058.5

Parameters of the trend line of the moving average: y = 144.55x + 7402.69

4. Summary Note

Management Control Service

Summary note

To the attention of Mr. MOUDAFFAR Management Controller

The centered moving averages approach to correct the seasonal phenomenon is based on the
calculation of the averages of the data over a horizon equal to a seasonal cycle (4 quarters).

The determination of the general trend by the moving averages method consists of replacing
each observed data point in the series by the average of the values that precede it and succeed it.
Each observed data point is therefore replaced by the average of the last 'n' observations.

The moving average is an effective tool for smoothing observed data. It provides a trend
General correction of seasonal variations. The linear adjustment will be made based on the moving averages.
thus calculated.

The method presents the inherent limitations of extrapolation methods because they are based on
the hypothesis of continuity.

M. X

5. Report on the trend

Observed value
Report to the trend = (or quarterly coefficient)
Adjusted value

Averages Values Data

Year Rank Sales Report Trend
mobiles adjusted seasonally adjusted
1 10 000,00 8 034,24
2 5,000.00 7,885.21
N-4
3 3 500,00 7 887,50 7,836.35 0.447 8,622.23
4 13,000.00 7,962.50 7 980,90 1,629 7,578.85
5 10 100.00 7 962,50 8,125.45 1,243 8 114,58
6 5,500.00 8,150.00 8,270.00 0.665 8,673.73
N-3
7 3,000.00 8,512.50 8,414.55 0.357 7 390,48
8 15,000.00 8,637.50 8,559.10 1,753 8,744.82
9 11,000.00 8 737,50 8,703.65 1,264 8,837.66
10 5,600.00 8,950.00 8,848.20 0.633 8,831.43
N-2
11 3,700.00 9,112.50 8 992,75 0.411 9,114.93
12 16,000.00 9,156.25 9,137.30 1,751 9,327.81
13 11,300.00 9,200.00 9,281.85 1,217 9,078.69
14 5,650.00 9 307,75 9,426.40 0.599 8,910.29
N-1
15 4,000.00 9 853,98
16 16,562.00 9,655.45

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 12 of 88
 6. Seasonal coefficients

Trimesters Average seasonal coefficient Corrected coefficient

1 1,241 1,245
2 0.632 0.634
3 0.405 0.406
4 1,711 1,715
Total 3.99 4.00
7. Average and standard deviation of observed data and seasonally adjusted data
Sales Seasonally adjusted data
Average 8,682.00 8 665,90
Standard deviation 4,599.17 682,21
8. Forecasted quarterly revenue
Parameters of the moving average trend line: y = 144.55X + 7,402.69
Forecasts Deseasonalized values Coefficient Seasonal values
17 9 860 1,245 12 273
18 10 005 0.634 6,344
19 10 149 0.406 4 120
20 10,294 1,715 17,657
Example: 9 860 = 144.55 * 17 + 7 402.69
Targeted objectives: Practice of sales forecasting methods (Moving averages - Adjustment -
Seasonal coefficients
Estimated duration: 30 minutes
Course of TP3: Individual work
Statement:
As part of the sales budgeting, you are tasked with forecasting the sales of a new
store (located in the OUARDIGHA region) for the year N+1, taking into account the "effect
opening": sales forecasts for a new store must be increased by 30% for the
10% for the first quarter and 10% for the second quarter compared to those of a reference store.
existing.
This task was initiated by your manager, Mr. JAMALI, who provides you with the figures.
quarterly business results of the last three years, as well as their graphic representation.
Turnover for the last 3 years (in KDh)
Averages
Values Values Report to the CA
mobiles (order
Observed Adjusted trend Seasonally adjusted
4)
3 1 738 938 0.7870 921
2 936 927 1.0098 943
N-2
3 742 920 916 0.8099 973
4 1268 909 905 1,4005 869
5 726 890 895 0.8115 906
6 866 878 884 0.9798 872
N-1
7 656 873 873 0.7513 860
8 1262 863 862 1.4634 865
9 686 853 852 0.8056 856
10 832 843 841 0.9895 838
N
11 604 830 0.7277 792
12 1238 819 1,5111 849

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 13 of 88
 Evolution of quarterly revenue

Dh

WORK TO DO

Comment on the evolution of quarterly revenue figures.

2. Recall what the moving average method consists of, and justify the calculation of 920.
KDh obtained during the 3rd quarter.
3. Determine the line of best fit for moving averages (y = ax + b), and calculate them
quarterly seasonal coefficients.
4. Assuming the trend is confirmed, calculate the forecasted revenue (for
the 2 trimesters N+1) for a reference store and for the new store (same
period).
Correction of TP3 :
The company's activity is seasonal and the quarterly revenues for the 2nd and 4th quarters
are experiencing a strong increase. Over the years, the general trend in sales appears to
decreasing.
1.
Moving averages aim to smooth out data related to seasonal activity.
The 920 are obtained by the calculation:

738 726
920 = 2 + 936 + 742 + 1268 + 2
4
2.
Regression line: y = ax + b

ax b
-10,768 948.5

Calculation of seasonal coefficients

Average: coefficient
N-2 N-1 N Adjusted coefficient
seasonal
Quarter 1 0.7870 0.8115 0.8056 0.801 0.798
Quarter 2 1.0098 0.9798 0.9895 0.993 0.989
Quarter 3 0.8099 0.7513 0.7277 0.763 0.760
Quarter 4 1.4004 1.4634 1.5111 1.458 1.453
Total 4.015 4

Tertiary CDC Manual TP: management control 2: Budget management & TB Page 14 of 88
 3.

T13 T14
Reference store (13*-10.768 +948.5) * 0.798 = 645 (14*-10.768 +948.5) * 0.989 = 789
New store 645 * 1.30 = 839 789 * 1.1 = 868

Targeted objectives: Presentation of the overall sales budget (breakdown by geographical area,
by period and by product
Estimated duration: 30 minutes
Conduct of TP4: Individual work
Statement:

Following various statistical studies, the company 'Mehdi Aliments' has established its sales budgets.
She sells three products Product 1, Product 2, and Product 3 in Morocco and abroad. The department in charge of
these forecasts presented the results of its study for the four quarters of the upcoming year in the
two subsequent documents:

Sales forecasts in Morocco

Products Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total

Product 1 700 800 1000 900 3400
Product 2 1200 1500 1600 1400 5700
Product 3 3800 4500 5400 4600 18300
Total 5700 6800 8000 6900

Document 2: Sales forecasts for abroad

Products Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total

Product 1 400 500 700 600
4 Product 2 700 900 1000 800
Product 3 2000 2600 3300 2600
Total

WORK TO BE DONE

1. Present the sales budget by geographic area (region)

2. Present the sales budget by period
3. Present the sales budget by product
4. Present the sales budget using a single document

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 15 of 88
 Correction of Lab 4:

1.

Periods Morocco Totals

Quarter 1 Quarter 2 Quarter 3 Trimestre 4 per product
Products
Product 1 700 800 1000 900 3400
Product 2 1200 1500 1600 1400 5700
Product 3 3800 4500 5400 4600 18300
Totals by quarter 5700 6800 8000 6900 27400

Periods Stranger Totals

Quarter 1 Trimestre 2 Quarter 3 Quarter 4 by product
Products
Product 1 400 500 700 600 2200
Product 2 700 900 1000 800 3400
Product 3 2000 2600 3300 2600 10500
Totals by quarter 3100 4000 5000 4000 16100

2.

Zone Quarter 1 Totals

geographic
Morocco Stranger per product
Products
Product 1 700 400 1100
Product 2 1200 700 1900
Product 3 3800 2000 5800
Totals by Zone 5700 3100 8800

Zone Quarter 2 Totals

geographical
Morocco Stranger by product
Products
Product 1 800 500 1300
Product 2 1500 900 2400
Product 3 4500 2600 7100
Totals by Zone 6800 4000 10800

Zone Quarter 3 Totals

geographic
Morocco Foreigner per product
Products
Product 1 1000 700 1700
Product 2 1600 1000 2600
Product 3 5400 3300 8700
Totals by Zone 8000 5000 13000

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 16 of 88
 Zone Quarter 4 Totals
geographical
Morocco Stranger per product
Products
Product 1 900 600 1500
Product 2 1400 800 2200
Product 3 4600 2600 7200
Totals by Zone 6900 4000 10900
3.
Periods Product 1 Totals
Zones by zone
geographical Quarter 1 Quarter 2 Quarter 3 Quarter 4 geographical
Morocco 700 800 1000 900 3400
Stranger 400 500 700 600 2200
Totals by quarter 1100 1300 1700 1500 5600

Periods Product 2 Totals

Zones by area
geographical Quarter 1 Quarter 2 Quarter 3 Quarter 4 geographical
France 1200 1500 1600 1400 5700
Stranger 700 900 1000 800 3400
Totals by quarter 1900 2400 2600 2200 9100

Periods Product 3 Totals

Zones by zone
geographical Quarter 1 Quarter 2 Trimestre 3 Quarter 4 geographical
France 3800 4500 5400 4600 18300
Stranger 2000 2600 3300 2600 10500
Totals by quarter 5800 7100 8700 7200 28800

4.

Geographic zone Totals

Morocco Stranger Period
Total
T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4
P1 700 800 1000 900 400 500 700 600 5600 1100 1300 1700 1500
P2 1200 1500 1600 1400 700 900 1000 800 9100 1900 2400 2600 2200
P3 3800 4500 5400 4600 2000 2600 3300 2600 28800 5800 7100 8700 7200

43500 Geographic zone

27400 16100

Target Objectives: Presentation of the budget for commercial expenses (After-sales service–
Sales Administration
Estimated duration: 60 minutes
Conduct of TP5: Individual work
5
Statement:

The company B&C specializes in the manufacture and distribution of equipment for buildings.
Among the ranges of products it offers, concrete mixers account for about 20% of its revenue.
total business. They are grouped within a subsidiary located in Mohammedia. The economic situation

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 17 of 88
 uncertainty at the end of year N encourages leaders to approach the coming year with more caution, and
especially an increased mastery of sales and production schedules. To establish forecasts
budgetary information for the first half of N+1, you have gathered the following information:

Other data

Given the seasonal nature of the construction sector, sales are the constraint.
main.
The company is already calculating its costs using the standard costing method.
The weekly working time is 39 hours, or 169 hours per month (Closure on
August)
Les stocks sont évalués au coût moyen pondéré.
The rate of social charges is 40% of the gross salary.
The VAT rate is 20% for all operations.
The corporate tax rate is 35%.
The accounting year ends on December 31st of each year.
The amounts are expressed in thousands of Dh (rounded to one decimal place).

Data concerning the commercial function

The company sells three models:

The Mitron model, imported from Italy, has a capacity of 120 liters with an electric motor, of which
the sale is particularly intended for DIY stores that benefit from a
20% discount.
Two gasoline models, manufactured by the company:
The Stella concrete mixer of 500 liters with a 10 HP engine.
The 200-liter Vega concrete mixer equipped with a 5HP engine.
The sale of these two products is completed:
For 60% with professionals at the current rate.
Pour 40% to a network of wholesalers who benefit from a 10% discount.

Sales forecasts

According to a survey conducted by salespeople among customers, the following program is established
(Price before discount):

4,900 Stella at the price of 6,000 Dh (excl. VAT)

5 450 Vega at the price of 4,000 Dh (excluding tax)
2,100 Mitrons at the price of 2,000 DH (excl. tax)

In agreement with management, the head of the sales department wishes to launch a campaign
promotional in January N+1, for which he hopes to obtain a 10% increase in sales forecasts.
This promotion consists of the edition of a brochure billed at 95,000 Dh (excluding tax) and its distribution
réalisée par mailing will cost 25,000 Dh.

The analysis of sales over the last 3 years reveals the seasonal variation coefficients.
following:
January February Mars April May June Total
0.6 0.8 0.9 1,1 1.3 1.3 6

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 18 of 88
 Commercial service charges

The table below summarizes the monthly forecasts of the costs of the sales function. These
charges are calculated based on historical standards based on the sale of 1,000 machines (In thousands
of Dh)
Charges Fixes Variables Total
Salary structure 34 34
Salesperson salaries 72 72
Social charges 42.4 42.4
Commissions 86,4 86.4
Other external charges 102 70 172
Taxes and duties 15 15
Financial expenses 10 10
35 35
Monthly total 310.4 156.4 466.8

Financial costs correspond to a loan taken out for the acquisition of commercial equipment.
The sales manager is considering the purchase of computer equipment in January for a
amount of 40,000 Dh (excluding tax), which will be depreciated using a declining balance over 4 years.

After-sales service (SAV)

Two technicians work in after-sales service and earn 9,500 Dh and 12,000 Dh gross per month, respectively.
They have a stock of spare parts valued at 23,000 Dirhams for engine repairs.
amount that the manager wishes not to exceed.
The statistical analysis of previous periods indicates that, on a monthly basis, around twenty repairs
are billed at an average price of 600 Dh (excluding taxes). Furthermore, the monthly consumption purchases of parts
Parts intended for repairs are estimated at 3,000 Dh (excluding tax).
WORK TO BE DONE
1. Determine the sales program in quantities (Round the results to the nearest whole number)
near
2. Present the sales budget in thousands of Dh (Round the revenue to the nearest integer)
closer)
3. Present the commercial expense budget (in thousands of Dh) (Round to one decimal place)
4. Present the after-sales service budget (in thousands of Dirhams)
5. Present the sales administration budget (in thousands of Dh)

Correction of TP5:

1.

Estimation of the sellers:

Stella : 4 900
Vega: 5 450
Friends: 2 100

Given the adjustment made by management (10%), and the seasonal coefficients, the
the sales program will be presented as follows:
5
Models January February Mars April May June Total
Coefficients 0.6 0.8 0.9 1,1 1.3 1.3 6
Stella 539 719 809 988 1 168 1 168 5,390
Vega 600 799 899 1 099 1,299 1,299 5,995
Friends 231 308 347 424 501 501 2 310
Total of the month 1,370 1 826 2 054 2,511 2 967 2,967 13,695

CDC Tertiary Manual TP: Management Control 2: Budget Management & TB Page 19 of 88
 The estimated quantities to be sold of each type of concrete mixer are multiplied by 1.10 for
take into account the requirements of management.
Each amount obtained is adjusted to the month and corrected by the seasonal coefficient of the month.

Example: January N+1 sales for the Stella model:

4 900 x 1.10 = 5 390 for sale for the semester.

5,390 / 6 = 898.33 to sell per month (average)
898.33 x 0.6 = 339 for sale in January.

2.
Budget des ventes (1000 Dh), Grossistes 10%, Magasins de bricolage 20%

Models PU January February Mars April May June Total

Stella Profession 6 I 940 2 587 2 911 3 557 4 204 4 204 19 404
Wholesalers 5.4 1,164 1 552 1,746 2 134 2 523 2,523 11,642
Vega profession 4 1,439 1918 2,158 2,638 3 117 3 117 14 388
Wholesalers 3.6 863 1151 1,295 1,583 1,870 1,870 8 633
Mitron Bricolage 1.6 370 493 554 678 801 801 3,696
Monthly total 5 776 7,702 8,664 10,590 12,515 12 515 57,763

The monthly revenue is determined based on the percentage distribution of sales among the
professionals and wholesalers.
For each type of client, the revenue is obtained by multiplying the monthly quantities by the unit price of
sale decreased by the granted discount rate.

Example:

CA, Vega model wholesalers in January:

Vega sales for the semester 5,995 units
So: 5,995 / 6,999.16 per month, or 999.16 x 0.6 = 599.5 rounded to 600
600 models for sale in January.
For wholesalers: 600 x 40% = 240 units, generating a turnover of 240 x 4 x 90% = 863 (KDh)

CA Bricolage model Mitron in January:

Unit selling price 2 KDh minus a 20% discount, which is 1.6 KDh
Mitron sales per semester: 2,310
So: 3,310 / 6 x 0.6 = 231 models in January.
CA = 231 x 1.6 = 369.6 rounded to 370 KDh

3.

Commercial expenses budget (In thousands of Dh)

Sales expenses January February Mars April May June Total

Salesperson salaries (1) 72,00 72.00 72.00 72,00 72.00 72.00 432,00
Social charges (2) 28.80 28.80 28.80 28,80 28.80 28.80 172.80
Commissions (3) 118.30 157,80 177.50 216.90 256.40 256.40 1 183.20
Total sales fees 219.10 258.60 278.30 317.70 357.20 357.20 1788.00
Advertising + Mailing (4) 10.00 10.00 10.00 10,00 10.00 10.00 60.00

Constant amount regardless of the level of activity.

40% social charges rate applied to the previous line (Salaries)
(3). Variable amount depending on monthly sales. Calculation example for January: Commissions

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 20 of 88
 86.4 KDh for 1000 models, which is 86.4 Dh per model. Number of models sold in January
1370 units, or 1 37à x 86.4 = 118368 Dh or 118.3 KDh
(4). The advertising expense will occur in January N+1 but the charge interests the sales of the whole
the year. The amount of 120,000 Dh (excluding tax) (95,000 + 25,000) is therefore subscribed for 12 months, amounting to 120
000 / 12 = 10,000 Dh (10 KDh)

4.

After-sales service budget

Billing After-Sales Service (5) 12.00 12.00 12.00 12.00 12.00 12.00 72.00
Consumed Purchases (6) 3.00 3,00 3.00 3.00 3.00 3,00 18.00
Salaries (7) 22.00 22.00 22.00 22.00 22.00 22.00 132,00
Social charges (8) 8.80 8.00 8.00 8.00 8.00 8.00 52.80
Total expenses of the SAP 33,80 33.80 33,80 33.80 33.80 33.80 202.80

20 repairs per month x 600 Dh = 12,000 Dh or 12 KDh

(6). Case data
9,500 + 12,500 = 22,000 Dh or 22 KDh
40% social charges applied to the previous line (Salaries)

5.

Sales Administration Budget

January February March April I June Total

Salary structure (9) 34 34 34 34 34 34 204.0
Social charges (10) 13.6 13.6 13.6 13.6 13.6 13.6 81.6
Other fixed external charges (11) 102.0 102.0 102.0 102.0 102.0 102.0 6 I 2.0
Other variable external charges (12) 95.9 127,8 143,8 175,8 207,7 207,7 958,7
Taxes and duties (13) 15.0 15.0 15.0 15.0 15.0 15,0 90.0
Financial fees (14) 10.0 10.0 10.0 10.0 10.0 10.0 60.0
Amortis, old equipment (15) 35.0 35.0 35.0 35.0 35.0 35.0 210.0
Amortization of computer equipment (16) 1.3 I ,3 1,3 1,3 1.3 1.3 7.5
Total 306,7 338,7 354,6 386,6 418,6 418,6 2 223,8

Total commercial costs

Total 569.6 641.0 676.7 748.1 819.5 819.5 4,274.6

Don't costs: Fixes
352.5 352,5 352.5 352 5 352.5 352.5 2114.7
(17)
217,2 288.6 324.3 395,7 467.1 467.1 2,159.9
Variables

(9) (11) (13) (14) and (15) data from the case
40% rate of social charges applied to the previous line (Salaries)
(12) Case data: 70 KDh x quantities to sell / standard quantities, which for January is: 70 x 1,370 /
1000 = 95.9 KDh
The depreciation of the computer equipment acquired in February is calculated as: 10,000 x 25% x 1.5 x 6 / 12
7,500 for a month: 7,500 / 6 = 1,250 rounded to 1.3 KDh.
The total amount of variable costs consists of commissions, the purchases consumed from
SAV and other variable external charges, all other costs are fixed.

Tertiary CDC Management TP: Management Control 2: Budget Management & TB Page 21 of 88
 Target objectives: Seasonal coefficients - Presentation of the sales and expense budget
commercials
Estimated duration: 80 minutes
Proceedings of TP6: Individual work
Enoncé :
The company 'FIRST' manufactures and markets a product called 'P'. Sales in quantities for
The years N-2, N-1, and N were as follows:
Year 1erquarter 2èmequarter 3emequarter 4thquarter Total
N-2 11,000 8,000 10,500 14,500 44,000
N-1 11 100 8,500 11,500 15 100 46 200
N 12,150 8,900 11 8(X) 16,584 49 434
Sales are billed at the unit price (excluding VAT) of 700 Dh, VAT: 20%, the sale prices will remain
stable for the first two quarters and will experience a decrease of 4% for the last two
quarters N+1.

For sales budgeting, the company expects an increase in quantities to be sold in N+1 to
a rate equal to the average rate of growth recorded over the past years.

Taux d'accroissement des ventes = Quantités vendues d'une année (-) Quantités vendues l'année
précédente / Quantités vendues l'année précédente

The distribution of sales for N+1 will be based on the average seasonal coefficients determined.
sales breakdown of the last three financial years.

Seasonal coefficient for each quarter = Quantities sold during the quarter (÷) Quantities
total sales of the year

6 8% of the sales from each quarter can be collected in the following quarter.

The commercial expenses of each quarter are represented by:

Proportional fees to turnover: 5% of the turnover (excluding tax) represented by expenses
various packaging supplies, taxed at 20% payable in cash.
Fixed costs for each month: 145,000 Dh, representing the net salaries of the salespeople
payables in cash and 30% of net salaries representing income tax and social charges payable
the following month.

WORK TO DO
1. Determine the growth rate of the quantities of sales recorded in year N-1, then in year N.
2. Determine the average growth rate that would be used to set the quantities to be sold in
N+1. (Retain a percentage in two digits, rounding to the nearest)
3. Determine the expected annual quantities for N+1 (Round to the nearest whole number)
4. Determine the seasonal coefficients recorded in N-2, N-1, and N. (Keep the percentage)
to two decimal places closest
5. Determine the average seasonal coefficients to apply to the projected annual quantities.
for N+1. (Keep the closest two-digit percentage)
6. Present the sales budget for N+1 to determine the revenue figures
forecasts.
7. Present the budget for commercial expenses.
8. The global market for product 'P' recorded a total sales volume of 329 in quantities in year N.
560 units, the expected increase for N+1 is around 8%, what would be the
What is the consequence on the market share of the company 'FIRST' in N+1?

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 22 of 88
 Correction of TP6:

1. Rate of increase in quantities sold:

46 200− 44,000
In N− 1∶ × 100 = 5 %
44,000

49 434 − 46,200
In N∶ × 100 = 7 %
46 200

2. Average sales growth rate:

5% + 7%
=6%
2
3. Expected quantities for sales of N+1:

46,434 x (1.06) = 52,400 units

4. Seasonal coefficients:
5.

A born 1erQuarter 2emeQuarter 3thQuarter 4thQuarter

N-2 25% 18% 24% 33%
N-l 24% 18% 25% 33%
N 25% 18% 24% 34%
Total 74% 54% 73% 100%
Average seasonal coefficient 25% 18% 24% 33%
6
6. Sales budget for N+1:

1heTrimester 2thQuarter 3thQuarter 4thQuarter Total and remaining

Quantities 13 100 9 432 12 576 17 292
52 400
PU (HT) 700 700 700 672
CA (HT) 9 170 000,00 6,602,400.00 8 451 072,00 11 620 224,00 35 843 696,00
VAT 20% 1,834,000.00 1,320,480.00 1,690,214.40 2 324 044,00 7,168,739.20
CA (TTC) 11,004,000.00 7,922,880.00 10 141 286.40 13 944 268,80 43 012 435,20
Collections:
T1 880,320.00
T2 10,123,680.00 7,289,049.60 633,830.40
T3 9,329,983.10 811 302,90
T4 12 828 726,70 1 115 542,10
Total 10 123 680,00 8,169,369.60 9,963,814.50 13 640 029,90 1 115 542,10

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 23 of 88
 7. Budget for commercial expenses:

Elements T1 T2 T3 T4 Total
Prospecting fees 5% of 458 500 330 120 422 553,60 581 011,20 1 792 184,80
CA (HT) VAT 20% 91,700 66 024 84,510.72 116,202.24 35 8436,96
Pro Fees (VAT included) 550 200 396 144 507,064.32 697 213,44 2 150 621,76
Fixed costs:
Net salaries 145,000 x 3 145,000 x 3 145,000 x 3 145,000 x 3
435,000 435,000 435,000 435,000 1,740,000.00
Social charges and income tax 130,500 130,500 130,500 130 500 522,000.00
Total 565 500 565 500 565 500 565 500 2,262,000.00
Disbursements:
FP 5% CA 550 200 396 144.00 507 064,32 697,213.44
Fixed costs 522,000 43,500.00 (1)
522,000 43,500
522,000 43,500
522,000 43,500
Total 1 072 200 974 744,00 1 073 064,32 1 263 213,44 43,500

Social charges and income tax paid outside of each quarter:

30% of the net salary of the last month of the quarter: 145,000 x 30% = 43,500
Total personnel expenses to be paid during the quarter:
Net salaries + Social security contributions and income tax - (30% of net salaries from the last month of the quarter)
For the first quarter: 565,500 - (30% x 145,000) = 522,000

8. Company's rank:

In N: Market share = 49,434 / 329,560 = 15%

In N+1 = 52,400 / 329,560 x 1.08 = 14.72%

Since the company's sales growth rate is lower than the growth rate of
the company will lose market share, its ranking will fall compared to its competitors.

Tertiary CDC Management TP: Management Control 2: Budget Management & TB Page 24 of 88
 Sequence sheet No. 2

Management Control Part II:

Module Hourly workload: 80 h
Gestion budgétaire et Tableau de bord

The programming and budgeting of the

Sequence No. 2 Expected time: 5 hours
production
Objective of the sequence Establish the production schedule and budget.

Theoretical part

Points to address
1 The establishment of a production program

2 Production budgeting

Practical part
TP
Target objectives: Production program (Linear programming - Graphical resolution)
Estimated duration: 30 minutes
Progress of TP1: Individual work
Statement :

A workshop produces 2 models X and Y, model X cannot be sold in more than 400 units, the
Product Y cannot be sold for more than 600 units. To manufacture X it takes 3 hours of labor.
work, and 2 hours for Y, knowing that the company only has 1,800 hours of labor
masterpiece.

The margin on variable cost realized from the sale of an X is 30 Dh, from the sale of a Y is 50 Dh.

WORK TO DO

What is the productive combination that allows for maximizing the margin on variable cost?

1 Correction of TP1:

The definition of linear programming is as follows:

Technical constraints: the production of an X consumes 3 hours of labor.

The production of one Y takes 2 hours. The capacity of this workshop is limited to 1,800 hours.
hence the following inequality:

3 + 2 ≤ 1800

Market constraints: it is not possible to sell more than 400 units for product X and
for product Y more than 600 units hence the following inequalities:

≤ 400 ≤ 600

Logical constraints: the quantities produced cannot be negative hence the

the following inequalities:

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 25 of 88
 ≥ ≥

Economic function to maximize:

= + This is the objective to be achieved.

The graphical representation is as follows:

(1) : + ≤
(2) : ≤
(3) : ≤
∆: = −

The field of possibilities (in yellow) is bounded by the lines passing through the points (0; 0), (400; 0),
(400 ; 300), (200 ; 600) et (0 ; 600)

The MAX function is represented by the green line (∆) allowing for search by translation.
parallel the farthest point in the field of possibilities. The farthest point from this line in
the field of possibilities is point M (200 ; 600).

So to reach the optimum, the quantities to produce are: x = 200, y = 600.

The maximum margin will be (30 x 200) + (50 x 600) = 36,000 Dh

We observe that the commercial constraint of product X is not saturated, we could have sold
200 more units; the commercial constraint of product Y is saturated, the market was limited to 600.
units. Similarly, the technical constraint regarding productive capacity is saturated (3 x 200) + (2
x 600) = 1 800. The logical constraints are respected, namely: ≥ ≥ .

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 26 of 88
 Target objectives: Production program (Linear programming - Graphic resolution)
Estimated duration: 30 minutes
Conduct of TP2: Individual work
Statement:

Let the time required in each workshop for the manufacturing of products A and B, as well as their
maximum capacities.

Workshops Product A Product B Maximum Capacity

Cut 1h 1.5 h 240 h
Stamping 0.5 hours 1h 120 h
Finishing 2h 1h 240 h

WORK TO BE DONE

What is the productive combination that maximizes the margin over variable cost?

The graphical resolution.

The best solution.
The interpretation of the results.

Correction of TP2:

We obtain the following inequalities:

Cut: 1 x + 1.5 y ≤ 240 (D1)

Stamping: 0.5x + 1y ≤ 120 (D2)
2 Finish: 2 x + 1 y ≤ 240(D3)

The quantities can only be positive or zero: x ≥ 0 and y ≥ 0

Graphical resolution: The zone of acceptability

The production constraints are plotted on a plan. For each constraint, the part of the plan that
does not respect it is hashed.

Cut (D1): for x = 0, y = 160 and for y = 0, x = 240

Stamping (D2): for x = 0, y = 120 and for y = 0, x = 240
Finish (D3): for and x for y = = 0, 0, x = y
120 = 240

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 27 of 88
 The polygon OABC represents the feasible production programs of products A and B.

The search for the best solution

The objective is to maximize the margin on variable costs. Two methods will allow for determination
the best solution :

The enumerative method (or vertex counting method): the coordinates of

The OABC peaks are read on the graph.

Summit X y Economic function 20x + 25y

O 0 0 0
A 0 120 3,000
B 80 80 3,600
C 120 0 2,400

The contribution margin is maximized for a production of 80 products A and 80 products B.

The graphical method: it consists of plotting the line of the economic function and the
move parallelly. The last point of the acceptable zone corresponds to the best
solution. On the graph, this corresponds to point B.

The interpretation of the results

The optimal solution allows to:

Optimize the margin on variable cost: MCV = 80 x 20 + 80 x 25 = 3,600

Respect the production constraints:

Cut: (1 x 80) + (1.5 x 80) = 200 (≤ 240) There are 40 unused hours left
Stamping : (0.5 x 80) + (1 x 80) = 120 (≤ 120) Workshop in full employment
Finishing: (2 x 80) + (1 x 80) = 240 (≤ 240) Workshop in full employment

The stamping and finishing workshops are at full capacity, which corresponds to the graphical optimum.
which is located at the intersection of the lines D2 and D3.

Targeted objectives: The production budget - The flexible budget

Estimated duration: 45 minutes
Course of TP3: Individual work
Statement:

The company BLOCPORT specializes in the manufacturing of solid wood doors. You are entrusted with
the following documents:

3 Document 1: Standard Reference Cost Sheet

According to a standard reference cost sheet, the production of a door requires:

1.8 m2wood at 38 Dh per m2,
42 DH of supplies (hardware, hinges, ...)
3 hours of highly skilled labor at an hourly rate of 120 Dh, including social and tax charges.
comprises.

To express the activity of the manufacturing workshop, the unit of work (UO) is the hour of labor.
(HMO).

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 28 of 88
 Document 2: Normal activity

Monthly production characteristics:

the normal activity is 1950 hours of labor,
The normal (or planned) production is 650 doors.

For the normal operation of the production center, indirect costs are distinguished:
variable costs:
the energy: 2,500 Dh
the consumables: 1,000 Dh
-other charges: 3,100 Dh.

fixed charges:
salaries and social charges:10,900 Dh
-amortization allowances: 3,000 Dh,
other miscellaneous charges: 850 Dh.

Document 3: Planned Activity

The forecasts (sales for the year N+1) are as follows:

Month J F M A M J J A S O N D Total
Quantities 700 750 760 600 560 430 400 (*) 0 500 550 600 640 6 490
Month of closure

Document 4 : Activité réelle

At the end of year N+1, the average actual production was 550 doors per month.

It required:
1 210 m2wood at 34 Dirhams per meter2,
24,200 Dh of supplies,
1,925 hours of labor at an hourly rate of 123 Dh,
20,850 Dh of total actual indirect costs (variable and fixed).

WORK TO BE DONE

By using the documents and appendices above:

1. Establish the monthly production budget for regular production over 11 months in
N+1.
2. Present the flexible budget of the production center for the following activity levels:
1,950 hours (normal activity), 1,500 hours and 1,200 hours.
3. Evaluate:
the real cost of actual production,
the predetermined (planned) cost of this actual production,
the overall gap and the gaps by item.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 29 of 88
 Correction of TP3:

Monthly production budget

Quantity / Quantity
Elements Unit cost Amount
Unit total
Direct charges (variable):
Raw materials 38.00 Dh 1.8 1,062 40 356,00 Dh
Supplies 42,00 Dh 1 590 24 780,00 Dh
Labor 120,00 Dh 3 1,770 212,400.00 Dh
Indirect charges:
Variable charges 3,385 Dh 3 590 5 991,00 Dh
Fixed charges 14 750,00 Dh
Total 298 277,00 Dh

2. Flexible budget of the 'Production' center

Elements Per hour 1950 Hours 1500 Hours 1200 Hours
Charges variables:
Energy 1.28 2,500 1,920 1,536
Consumables 0.51 1 000 765 612
Others 1.59 3 100 2,385 1,908
Total 1 6,600 5 070 4,056
Fixed charges:
Salaries and social charges 10 900 10 900 10 900
Depreciation allowances 3,000 3,000 3,000
Other various charges 850 850 850
Total 2 14,750 14,750 14 750
Total 1+2 21350 19,820 18 806
Hourly cost:
Variable 3.38 3.38 3.38
Fix 7.56 9,83 12.29
Cost of the unit of work 10.94 13,21 15.67

3. Gap Assessment Table

Established Cost of the
Actual Cost of Production
Unit Production
Elements of work 550 unités 550 units Discrepancies
Qty Cu Montant Qté Cu Amount
Subjects
m2 1 210 34,00 41 140,00 990 38,00 37 620,00 3,520.00
firsts
Supplies Dh 550 44,00 24 200,00 550 42,00 23 100,00
1,100.00
Labor
H 1 925 123,00 236 775,00 1 650 120,00 198 000,00 38 775,00
direct
Charges
H/MOD 1 925 10.83 20 850.00 1 650 10.94 18 051.00 2,799.00
indirect
Total 550 587,21 322 965,00 550 503,22 276 771,00 46 194,00

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 30 of 88
4 Target objectives: Linear programming of sales
Estimated duration: 30 minutes
Execution of TP4: Individual work
Statement:

The company AMAL manufactures two products A and B that require work in two workshops I and II.
The machine hours per unit and per workshop as well as the production capacity are provided.
in the following table:

Workshop I Workshop II
Product A 3 hours 4 hours
Product B 5 hours 3 hours
Daily capacity 1500 hours 1200 hours

It is assumed that for commercial reasons, the production of A cannot exceed 200 units per
In the morning. The margins on unit variable cost are 1000 Dh for A and 500 Dh for B.

WORK TO BE DONE

Determine the best production combination for the company

Correction of TP4:

Technical constraints:

They are represented by the production capacity of each workshop:

Workshop I: 3A + 5B≤ 1500 hours

Workshop II: 4A + 3B≤ 1200 hours

Commercial constraint: A≤ 200

The economic function to be maximized: y = 1000A + 500B

Graphic resolution:

Determination of points:

Workshop I: 3A + 5B ≤ 1500
If A = 0 B= 1500/5 =300
If B = 0 A= 1500/3 =500

Workshop II: 4A + 3B ≤ 1200

If A = 0 B= 1200/3 =400
If B = 0 A= 1200/4 =300

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 31 of 88
 The graphical resolution reveals the most profitable combination for the company consisting of 200.
Product A and 133 products B.
The total margin is (200 x 1000) + (133 x 500) = 266,500 Dh
Point P represents the full employment of the available hours in workshops I and II. 136 A and 218 B are
a global margin of 245,000 Dh.

Point P then represents the technical optimum.

Point P' represents the economic optimum.

Objectifs ciblés : Présentation du budget de production

Estimated duration: 15 minutes
Proceedings of TP5: Individual work
Statement:

The standard production cost of a product P1 is as follows:

Elements Quantity C.U Amount
Raw material M1 2 kg 10 20
Raw material M2 1 liter 6 6
Labor 4 hours 20 80
Workshop charges
Workshop I 2.5 HM 24 60
Workshop II 3 HO 12 36
Unit total cost 1 unit 202

Knowing that the production quantities for the first two months of year N+1 are distributed
as follows:
January February
1200 1000

WORK TO DO

5 Present the production budget for the months of January and February of the year N+1

Correction of TP5:

January February
Elements
Quantity C.U Amount Quantity See you Amount
Raw materials:
M1 2400 kg 10 24,000 2000 kg 10 20,000
M2 1200 L 6 7,200 1000 L 6 6,000
Workforce 4800 h 20 96,000 4000 h 20 80,000
Workshop charges :
Workshop I 3000 HM 24 72,000 2500 HM 24 60,000
Atelier II 3600 HO 12 43 200 3000 HO 12 3,600
Unit total cost 1200 242 400 1200 202,000

Note:
Budget Control: the quantified production budgets tighten period budget control
during the period. However, the production carried out will not necessarily be the one planned:

Actual production < Planned production A goal gap: we need to identify the causes that
can be endogenous or exogenous.
Actual production > Expected production Exceeding the goal: the reasons must be
determined to perpetuate them in the future.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 32 of 88
 Since the actual production often differs from the planned production, the cost of
The quantified production must be adjusted to the actual quantity produced for a comparison.
valid.

Sequence sheet N°3

Management control part II: management Time zone:

Module
budgetary and dashboard 80 h
The budgeting of supplies and the Forecasted weather:
Sequence No. 3
rational management of stocks 10 h
Objective of the
Establish the supply budget and manage inventory
sequence

Theoretical part
Points to address
1 The procurement policy

2 The costs associated with a procurement policy

3 Inventory management models

4 Budgeting for supplies

Practical part
Target objectives: Total inventory management cost - Economic quantity - Budget of
supplies.
Estimated duration: 60 minutes
Course of TP1: Individual work
Statement:

A company wants to manage the supply of a 'Glass Panel' component as effectively as possible.
Currently, she places 5 orders a year. The average purchase price of a glass slab (1.9 m
The cost of a 2.2 m parcel is 2,000 Dh. The cost of placing an order is 10,000 Dh (delivery cost,
insurance, etc.). The slabs are stored in a warehouse; we can estimate the storage cost (of
possession) at 4% per year of the average stock value. The average annual consumption is 25
000 dalles.
TP1 1. Calculate the annual cost of managing the stock of glass tiles.
2. Determine the optimal ordering rhythm.
3. Calculate the savings that could be achieved.

For the first half of year N, the sales manager provides the following data related to the model
X860 made from glass panels:

Month January February Mars April May June

Number of units X860 10,000 9,000 12,000 14,000 11 000 10,000
Glass slabs 625 565 750 875 690 625

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 33 of 88
 The production service wishes to establish the supply requirements for the slabs needed for
regularly satisfy production. Currently, the service orders in constant quantities of 900
glass panes for the supply service, on specified dates based on the needs of the
fabrication. The date of the request corresponds to the day when the actual stock reaches the alert stock;

The alert stock consists of:

-a minimum stock intended to cover the delivery time,
a safety stock set at 100 glass tiles;

The delivery time set by the procurement department is 1 month;

On January 1st of year N, the initial stock amounts to 1200 tiles;
The stock as of June 30 must be sufficient to cover the consumption for the month of July.
It can be estimated at 550 tiles.

4. Present in table form the supply program related to glass slabs.

highlighting the alert stock, the initial stock before delivery, the deliveries, the
consumptions, the actual stock and the order dates calculated to the exact day (appendix to
complete).
Annex: procurement policy of the production service

January February Mars April May June

Number of days 31 28 31 30 31 30
Alert stock
IF before delivery 1,200
Delivery
IF after delivery
Monthly Consumption 625 565 750 875 690 625
Final stock

Break/Delivery
Date de commande

Correction of TP1:

1.

Annual cost of managing glass tile inventory = Ordering cost + Holding cost

25000 × 2000 × 4%
= 5× 10000 + 250,000 Dirhams
2×5

2.

N 2000 × 25000 × 4%
Number of orders per year = =
Economic quantity 2 × 10000
= 10 command

3.

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 34 of 88
 25000 × 2000 × 4%
New cost =10 times 10000 + 200000 Dh
2 × 10

A realized saving of: 250,000 - 200,000 = 50,000 Dh (20% savings)

4.

January February Mars April May June

Number of days 31 28 31 30 31 30
Alert stock 725 665 850 975 790 725
IF before delivery 1,200 575 910 160 185 395
Delivery - 900 - 900 900 900
IF after delivery 1200 1475 910 1060 1085 1295
Monthly consumption 625 565 750 875 690 625
Final stock 575 910 160 185 395 670

Break/Delivery 23/02 02/04 3/05 14/06

Order date January 23 02/03 03/04 14/05

January alert stock = monthly consumption + safety stock = 625 + 100 = 725

Breakup date of February= 575−100× 28 = 23 février, whether an order on January 23.

565

The stock at the end of June is sufficient for the consumption of 550 tiles in July (taking into account a stock
of safety of 100 slabs).

Targeted objectives: Economic quantity - Supply budget.

Estimated duration: 45 minutes
Conduct of TP2: Individual work
Statement:

Article B 219 shows an initial stock of 200 units. Its projected consumption for year N
is the following:

January 180 I 380 September 490

February 300 June 450 October 420
Mars 350 July 440 November 360
April 360 August 100 December 170
2

The delivery time for this item is 1.5 months.

The safety stock is for 10 to 15 days of consumption.
The orders were placed on the 1st.eror the 15th of the month.
The unit cost of item B 219 is 8 Dh.
The cost of placing an order is 100 Dh.
The stock possession rate is 10%.

WORK TO BE DONE

1. Calculate the constant order quantity (economic lot).

2. Establish the stock sheet in quantity and deduce the budgets for orders,
deliveries, consumptions, and stocks.

Tertiary CDC Management TP: Management Control 2: Budget Management & TB Page 35 of 88
 Correction of TP2:

1.

N = 180 + 300 + 350 + 360 + 380 + 450 + 440 + 100 + 490 + 420 + 360 + 170 = 4000
Ci = 100 Dh
Pu = 8 Dh
t = 10 %

2 × N × Ci 2 × 4000 × 100
Economic quantity = = = é
Pu × t 8 × 10%

4000
The optimal cadence of′ supplies =
1000

2.

Stock sheet

Outings Stock final Appetizers Adjusted final stock

200
January 180 20 1000 1020
February 300 720 720
Mars 350 370 370
April 360 10 1000 1010
May 380 630 630
June 450 180 1000 1180
July 440 740 740
August 100 640 640
September 490 150 1000 1150
October 420 730 730
November 360 370 370
December 170 200 200

Procurement budget

J F M A M J J A S O N D
Orders 1,000 1,000 1 000 1 000
Deliveries 1,000 1,000 1,000 1,000
Consumptions 180 300 350 360 380 450 440 100 490 420 360 170
Stocks 1 020 720 370 1 010 630 1 180 740 640 1 150 730 370 200

Target objectives: Supplies budget

Estimated duration: 30 minutes
3 Course of TP3: Individual work

Tertiary CDC Manuel TP: management control 2: Budget Management & TB Page 36 of 88
 Statement :

The raw material needs of a company are irregular and can be estimated at:
January 3 tonnes April 4 July 5 October 6
February 5 May 6 August 6 November 7
Mars 6 June 5 September 5 December 12

WORK TO BE DONE

The workshop manager asks you to determine the orders:

in constant lots of 6 tons and irregular periods.
in irregular batches and constant periods.

The needs in each case are estimated at one month of consumption plus the safety stock.
of one month as well (that is, two consecutive months).

Note:
The stock on 31/12(N-1) is 5 tons.
The need in January (N+1) is 3 tons.

Correction of TP3:

Lots of constants
MONTH J F M A M J J A S 0 N D
Needs 8 11 10 10 11 10 11 11 11 13 19 15
Stock before delivery 5 8 9 9 11 5 6 7 7 8 8 7
Delivery 6 6 6 6 0 6 6 6 6 6 6 6
Stock after delivery 11 14 15 15 11 11 12 13 13 14 14 13
Monthly consumption 3 5 6 4 6 5 5 6 5 6 7 12
Final stock 8 9 9 11 5 6 7 7 8 8 7 1

Note: possibility to place an order in May even though the stock covers the need.

Irregular lots
MONTH J F M A M J J A S 0 N D
Needs 8 11 10 10 11 10 11 11 11 13 19 15
Stock before delivery 5 5 6 4 6 5 5 6 5 6 7 12
Delivery 3 6 4 6 5 5 6 5 6 7 12 3
Stock after delivery 8 11 10 10 11 10 11 11 11 13 19 15
Monthly consumption 3 5 6 4 6 5 5 6 5 6 7 12
Final stock 5 6 4 6 5 5 6 5 6 7 12 3

Note: The company has an interest in retaining the second case as the supply is better aligned with
fluctuations in production while, in the first case, there is a risk of breakage (in
December) or of overstocking if an order is delivered in May.

Target objectives: Total inventory management cost - Economic quantity - Budget of

supplies.
Estimated duration: 60 minutes
4
Procedure of TP4: Individual work
Statement:

The Moroccan office furniture company manufactures various models of office chairs from

Tertiary CDC Manuel TP: Management control 2: Budget management & TB Page 37 of 88
 of the same base but with different padding. Production is often disrupted by
supply disruptions of the bases. The accountant wants to improve inventory management of
legs.

The office chair production program is reproduced in Appendix 1. The management rules
The stock of bases is indicated in appendix 2.

Annex 1: seat production program (fiscal year N)

January 860 May 1020 September 930

February 880 June 1060 October 880
Mars 900 July 870 November 900
April 950 August 520 December 920

Annex 2: rules for managing the stock of chair bases

The stock was 40 units on January 1st N and must be increased to 600 units by December 31st N.
The supply is carried out in constant quantities.
The cost of launching an order is 1000 Dh, which is a relatively significant amount because this
product is imported.
The stock holding rate is estimated at 12% of the average stock value.
The purchase price of the bases is 120 Dh per unit.

WORK TO BE DONE

Let Nb be the number of orders, you are asked to determine:

The optimal number of orders.

2. The economic order quantity.
3. The minimum cost of inventory management for fiscal year N.
4. The procurement program of the Moroccan company for fiscal year N.

Correction of TP4:
1.

Total quantity to be supplied = consumption of the period + stock replenishment = 10690 +

(600 - 40) = 11250 articles.
Total storage cost = 1000N + 11250 x 120 x 12% / 2Nb
The optimum is reached if f’(Nb) = (1000N + 81,000/Nb)’=0
Nb = 9

2.

Q eco = N /Nb = 11250/9 = 1250 units or items.

3.

Minimal inventory management cost

Purchase cost + launch cost + holding cost.
11250 x 120 + 9 x 1000 + 81000 / 9
1,368,000 Dh.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 38 of 88
 4.

Supply program

J F M A M J J A S O N D
YES 40 430 800 1150 200 430 620 1000 480 800 1170 270
Consumption. 860 880 900 950 1020 1060 870 520 930 880 900 920
Order 1250 1250 1250 X 1250 1250 1250 X 1250 1250 X 1250
SF 430 800 1150 200 430 620 1000 480 800 1170 270 600

Sequence sheet No. 4

Management Control Part II:

Module Hourly mass: 80 h
Budget management and Dashboard

Sequence No. 4 The budgeting of investments Expected time: 10 h

Objective of the sequence Etablir le budget des investissements

Theoretical part

Points à traiter
1 The criteria for investment choices

2 The choice of means of financing investments

Practical part
TP
Target objectives: Investment selection criteria (Cash Flows - NPV - IRR - Payback Period)
Profitability Index
Estimated duration: 60 minutes
Conduct of TP1: Individual work
Statement:

To develop its business, the company SDT purchases new equipment with the following characteristics
following:
Expenses incurred Forecasts
1
Purchase price: 250,000 DH (excluding taxes); Operating duration: 5 years;
Installation fees: 47,000 MAD (excluding VAT); Depreciation method: Straight-line;
-Frais de formation du personnel : 20 000 DH (HT) ; -Chiffre d'affaires annuel : 315 000 DH (HT) ;
Increase in working capital requirement in the first year: 30,000 - Variable costs: 40% of revenue (excluding tax)
DH. Charges fixes (excluding depreciation): 70,700 DH
per year;
Residual value (net of taxes): 24,300 DH.

CDC Tertiary Manuel TP: management control 2: Budget management & TB Page 39 of 88
 WORK TO DO
Determine the amount of capital invested.
2. Knowing that the discount rate is 10%, study the profitability of this investment on
the basis: of the updated payback period; of the Net Present Value (NPV); of the Index of
Profitability (IP) or profitability and the Internal Rate of Return (IRR);

Correction of TP1:

The amount of capital invested

It includes the costs incurred to initiate the investment project:

The purchase price excluding taxes of the equipment

Installation fees
The training costs for the staff who will handle the equipment
The increase in working capital needs knowing that this increase is recovered at the end of the period and this amount
the variation of the working capital requirement should not be amortized.

Investment capital = 250,000 + 47,000 + 20,000 + 30,000 = 347,000

2.

Determination of cash flows

Cash-flows = Revenues - Expenses = Net results + Depreciation allowances + (Recovery of the variation
net debt + net residual value after tax
Depreciation allocations = (I - Change in working capital) / 5

Years 1 2 3 4 5
CAHT 315000 315000 315000 315000 315000
Ch. variables 126000 126000 126000 126000 126000
Ch. Fixes outside
70700 70700 70700 70700 70700
AMORT
Allocations to
63400 63400 63400 63400 63400
AMORT
RAI 54900 54900 54900 54900 54900
IS 16470 16470 16470 16470 16470
Net income 38430 38430 38430 38430 38430
Depreciation 63400 63400 63400 63400 63400
Operating CAF 101830 101830 101830 101830 101830
Recovery of the
30000
BFR
Residual value 24300
Cash-flows 101830 101830 101830 101830 156130
-t
(1,1) 0.909 0.826 0.751 0.683 0.621
Cash-flows 69551,260 96944,446
92572,72727 84157,02479 76506.3862
updated 2 2
Cash-flows 322787,39 419731,84
92572,72727 176729,7521 253236,138
cumulative 8 5

VAN = - I+ CF actualisé s cumulés = 72731,84457

So, the project is profitable because the NPV is positive.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 40 of 88
 Determination of the payback period

It is located between the 4thand the 5èmeyear; because the updated cumulative cash flows equal the invested capital
Recovery time = 4 + ((347000 - 322787.398) / 96944.4462) = 4.24975749
In other words, the duration is 4 years and 3 months (0.24975749 x 12) = 2.99708994)

Profitability Index (PI)

IP= CF accumulated actualized/I = (1+NPV)/I = 1.209601858

The project is therefore profitable

Internal Rate of Return (IRR)

The CFs are a decreasing function of the discount rate. To reduce these CFs and achieve capital.
Investing, we assume by iteration that the discount rate = 14%

Years 1 2 3 4 5
Cash-flows 101830 101830 101830 101830 156130
-t
(1,14) 0.877 0.769 0.675 0.592 0.519
60291,534 81089,029
Updated CF 89324,5614 78354,87842 68732.3495
6 6
296703,32 377792,35
Cumulative CF 89324,5614 167679.4398 236411,789
4 4

It is found that the updated cumulative cash flows approach 37400.

Let's take t=15%

Years 1 2 3 4 5
Cash-flows 101830 101830 101830 101830 156130
-t
(1,15) 0,870 0.756 0.658 0.572 0.497
66954.877 77624,203
Updated CF 88547,82609 76998,10964 58221,633
9 7
232500,81 290722,44
Cumulative CF 88547,82609 165545.9357 368346.65
4 7

T = 14% Sum of updated cash flows 377792.354

T = TIR Cumulative of updated cash flows 374000
T = 15% Sum of updated cash flows 368346.65

So, the IRR is between 14 and 15%, that is 14.401%

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 41 of 88
 Target objectives: Investment selection criteria (Cash Flows - NPV)
Estimated duration: 35 minutes
Conduct of TP2: Individual work
Statement:

A company is considering undertaking an investment project for which you are responsible for analyzing the
profitability. This project includes the purchase of two pieces of equipment A and B

Features A B
2 Acquisition price excl. tax 200,000 500,000
Depreciation Degressive over 5 years Linear over 5 years
Net residual tax value 20,000

-The forecast study of the turnover over 5 years yielded the following results: (in 1,000 Dh)

Years 1 2 3 4 5
CA 1,200 1,900 2000 2 100 2 150
Contribution margin on variable costs 20% 20% 20% 20% 20%

Fixed charges, excluding amortizations (in thousands)

Years 1 and 2 3 and 4 5

Fixed charges 200 250 280

The necessary working capital requirement is estimated at 30 days of projected net sales. It will be recovered at the end of the
5th year. (Neglect the variations of the additional working capital requirement)

WORK TO BE DONE

Calculate the successive cash flows and the NPV at 9%. The corporate tax rate: 30%

Tertiary CDC Manuel TP: management control 2: budget management & TB Page 42 of 88
 Correction of TP2:

Depreciation calculations:
Equipment A: declining over 5 years
Declining balance schedule
Years Amortizable base Annuity Residual value
1 200,000 80,000 120,000
2 120,000 48,000 72,000
3 72,000 28,800 43 200
4 43,200 21,600 21,600
5 21,600 21,600 0

Equipment B: linear over 5 years

Constant annuity = 500,000 / 5 = 100,000
Calculation of the variation of the working capital requirement

Years 1 2 3 4 5
Projected Revenue 1200000 1900000 2000000 2100000 2150000
BFR 100000 158333.33 166666.67 175000,00 179,166.67
100000
Variation of the working capital requirement 58333.33 8333.33 8333.33 4166.67

Cumulative discounted cash flows calculation

Years 0 1 2 3 4 5
CAHT 1200000 1900000 2000000 2100000 2150000
CV 240000 380000 400000 420000 430000
CF OUTSIDE
200000 200000 250,000 250000 280000
AMORT
DOTAT aux
180000 148000 128800 121600 121600
AMORT
RAI 580000 1172000 1221200 1308400 1318400
IS 174000 351600 366360 392520 395520
Net result 406000 820400 854840 915880 922880
AMORT 180000 148000 128800 121600 121600
Operating CAF 586000 968400 983640 1037480 1044480
( - ) investment capital -700000
variation of
-100000 -58333.33 -8333.33 -8333.33 -4166.67
BFR
Recovery of
179166.67
BFR
Residual value 20000
Cash-flows -800000 527666,667 960066,6667 975306,6667 1033313,33 1243646,67
(1.09)-t 0,917 0,842 0,772 0,708 0.650
CAHS-FLOW
484097,859 808068,9055 753115,696 732025,216 808285,002
ACTUAL
Cumulative CF 484097,859 1292166,765 2045282,461 2777307,68 3585592,68
NPV = -Investment Capital + Accumulated Discounted Cash Flows = 2785592,679

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 43 of 88
3 Target objectives: Choice of financing method (Loan – Lease financing)
Estimated duration: 35 minutes
Procedure for TP3: Individual work
Statement:

To finance equipment costing 300 (the figures are expressed in thousands of dirhams) subject to declining depreciation.
over 5 years, a company has the choice between:

Loan of 240; Interest rate of 10%; Repayable in 5 years by constant annuities and a
self-financing of 60.
Lease for 5 years; annual rent equal to 80.

WORK TO BE DONE

By recognizing the discounted rate of 6% and the corporate tax of 30%, what choice should be made?
based on the outflows triggered by each of the formulas.

Correction of TP3:

1erchoice: Loan

First, the preparation of the amortization schedule:

Calculation of the declining rate

Calculation of normal rate: 100/n = 100/5 years = 20%

Si la durée est inférieure de 3 ans, on multiplie par 1,5.
If the duration is between 3 years and 5 years, we multiply by 2.
If the duration is greater than 5 years, we multiply by 3.

Since the loan duration is 5 years, we multiply by 2. Therefore, the calculation of the decreasing rate is: 20% x 2
= 40%
For the depreciation, we multiply the capital at the beginning of the period by the declining rate: 300 x 40% = 120
So, the period-end capital is: 300 - 120 = 180

Thus, it continues until the fourth year when the declining rate becomes 50% because the depreciation is
became less than 40%. Then, in the last year, the declining rate is 100% in order to amortize the capital at the end
of period (C.F.P in year 5 = 0).

Capital at the beginning of Capital at the end of

Years Rate Depreciation
period period
1 300 40% 120 180
2 180 40% 72 108
3 108 40% 43.2 64.8
4 64.8 50% 32,4 32.4
5 32.4 100% 32.4 0

Secondly, the calculation of the total actual disbursements updated:

0.1
Annuity =240 × −5 = 63.32
1− 1,1

Interest = 240 x 10% = 24

Amortization = annuity - interest = 63.32 - 24 = 39.32
Tax Economics on Accounting Amortization = Accounting Amortization x 30% = 120 x 30% = 36
Tax savings on interest = Interest x 30% = 24 x 30% = 7.2 ...

CDC Tertiary Manuel TP: management control 2: Budget management & TB Page 44 of 88
 Actual disbursement = Annuity - E. F/A. C - E. F/Interest = 63.32 - 36 - 7.2 = 20.12
Actualized real disbursement for year 1 = D.R x (1 + i)-n= 20.12 x (1 + 0.1)-1= 18.29
Actual disbursement updated for year 2 = 35.68 x (1 + 0.1)-2= 29.48

DR
Années C.D.P Intérêt Amorti. C.F.P Annuités E.F/A.C. E.F/Intérêt DR
Updated
1 240 24 39.32 200.7 63,32 36 7.2 20.12 18.29
2 200.7 20.07 43.2 157.42 63.32 21.6 6.02 35.68 29,48
3 157,42 15,74 47,58 109.8 63.32 12.96 4,72 45.62 34.27
4 109,8 10.98 52.33 57,5 63.32 9.72 3.29 50.29 34.34
5 57.5 5.75 57.5 0 63.32 9.72 1.72 51.14 31.75

C.D.P : Capital at the beginning of the period

Fiscal Economies
A.C. : Accounting Depreciation
D.R: Actual disbursement

∑D. Ra + Self-financing = 148.13 + 60 = 208.13

2èmechoice: Lease Financing

Annuities: 80 DH
Tax Economy: 80 x 0.3 = 24
Actual disbursement: 80 - 24 = 56
Updated actual disbursement:
−5
1− 1.06
D. Ra = 56 × 235.89
0.06

The choice of a source:

We have the updated actual disbursements of the loan combined with self-financing being lower than that of
leasing. The choice is therefore borrowing.

Target objectives: Choosing a financing method (Equity - Loan - Lease)

Estimated duration: 45 minutes
Conduct of TP4: Individual work
Statement:

The manager of the Karam company is asking you to advise him on the choice of financing for equipment.
of 2,000,000 DH amortizable on a declining basis over 5 years, and for which it is possible:

To finance this equipment entirely with own funds.

Let’s borrow 1,800,000 DH; interest rate 10%; to be repaid over 5 years with constant annuity.
4 self-financing of 200,000 DH.
To conclude a Credit contract; duration of 5 years; with annual fees of 640,000 DH.
each one.

WORK TO DO

Assuming a discount rate of 8% and a corporate tax of 30%, determine the choice based on
on the actual disbursements.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 45 of 88
 Corrected TP4:

Loan

Capital at the beginning of Capital at the end of

Years Rate Depreciation
period period
1 200 40% 80 120
2 120 40% 48 72
3 72 40% 22.8 49.2
4 49,242 50% 24.6 24.6
5 24.6 100% 24.6 0

Depreciation:

0.1
180 × −5 = 47.49
1− 1,1

DR
Years C.D.P Interest Amortization. Annuity E.F/A.C E.F/Interest DR
updated
1 180 18 2 ,49 47,49 24 5.4 18.04 16.40
2 150.51 15,051 32.43 47.49 14.4 4.51 28.58 23.61
3 118.08 11,808 35,682 47,49 6.84 3.54 37.11 27.88
4 82,328 8.23 39.25 47,49 7.38 2.46 37.65 25.71
5 43.07 4.30 4.42 47,49 7.38 1.29 38.82 24,10

∑D. Ra + Self-financing = 117.70 + 20 = 137.70

Leasing

Annuité : 64
Tax Economy: 64 x 0.3 = 19.2
Actual disbursement = 64 - 19.2 = 44.8
Updated actual disbursement:

−5
1− 1.08
D. Ra = 44.8 × = 178.78
0.08

The choice of a source:

We have the actual updated disbursements from the loan combined with self-financing being lower than that of
leasing. The choice therefore is borrowing.

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 46 of 88
 Targeted objectives: Financing plan
Estimated duration: 120 minutes
Execution of TP5: Individual work
Statement :
AGRONEGOLE is a commercial company specialized in the distribution of two types of products.
agri-food products managed in a distinct manner.
Market prospects appear to be favorable for expanding its capacity. As a result, the
The general management plans to undertake an investment program that should allow for
strengthening the company's market share.
The project that will be operated for a duration of 5 years starting from year A1 is characterized by the data.
following:
Acquisition and realization of:
Construction for 15,000, amortizable over 5 years.
Equipment and furniture for 2500, depreciable over 10 years.
Technical installations for 3750, amortizable over 10 years.
Annual renewals for 2000.
2. Operating forecast by product type:
Year A1 Years A2 to A5
Operating data TYPE 1 TYPE 2 TYPE 1 TYPE 2
Revenue excluding tax 65,000 30,000 117.000 45,000
Margin ratio on purchase cost 30% 15% 34% 14%
Forecast variable charges 2,000 1,000 ? ?
Common fixed charges (excluding depreciation) 6.750 8.750
Depreciation allowances on old assets
5 2.250 2.250
immobilizations
The net residual value of the project is estimated at 14.375
4. We will disregard the variations in working capital requirements over the project's duration.
5. For project financing, the management is considering the following scenario:
Bank loan over 5 years repayable in quarters starting from the end of A2 and with a one-year grace period:
montant 5.000 ; taux de 11%
Loan of 7,500 from the parent company at an interest rate of 10%, repayable by installments.
constants over 5 years.
For the equipment and furniture, the company plans to enter into a lease agreement for 4 years at
starting from the beginning A1 according to the following conditions:

Security deposit: 15% of the value of equipment and furniture with refund at the end of the contract;
Annual fee to be paid from A1: 750
-Buyback option at the end of the 4th year: for 20% of the original value. Total depreciation in
5th year.
Knowing that the corporate tax rate is 30% and the discount rate adopted by management is 10%
Work to be done:
1. Calculate the investment expenditure.
2. Study the economic profitability of the project using the criteria of NPV and the index of
profitability.
3. Establish the amortization schedule for the two loans.
4. Determine the cash flows after financial expenses and corporate tax (after financing).
5. Establish the project financing plan.
N.B: all amounts are in thousands of DH.
Excerpt from the financial table:
1 2 3 4 5
T=10% 0.909 0,826 0.751 0.683 0.621

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 47 of 88
 Corrigé du TP5 :

1. The investment expenditure:

1− 1,1−5
D. I = 15,000 + 2,500 + 3,750 + 2,000 × = .
0.1

C.E.P A1 A2 A3 A4 A5
Margin / purchase cost * 24 000,00 46,080.00 46,080.00 46,080.00 46,080.00
Variable charges 3,000.00 5 100.00 5,100.00 5,100.00 5,100.00
Depreciation allowances
Old properties. 2 50.00 2,250.00 2 250,00 2 250,00 2,250.00
-Real estate news. 3 625,00 3,625.00 3,625.00 3,625.00 3,625.00
Fixed municipal charges 6,750.00 8 750,00 8 750,00 8 750,00 8 750,00
Operating result 8,375.00 26 355,00 26 355,00 26,355.00 26 355,00
I.S at 30% 2 512,50 7 906,50 7 906,50 7,906.50 7,906.50
Net expenses 5,862.50 18 448,50 18,448.50 18,448.50 18,448.50
Depreciation allowances 5 875,00 5 875,00 5 875,00 5 875,00 5,875.00
Net cash flows 11 737,50 24,323.50 24,323.50 24,323.50 24,323.50
∑ C.F Nets 109 031,50
Residual value 14,375.00

Margin on purchase cost = 65,000 x 30% + 30,000 x 15% = 24,000

11 700 45 000
** Variable charges p. = 2,000 x (11,700/65,000) + 1,000 x (45,000/30,000) = 5,100

2. Profitability study:

VAN = -28.832 -∑ Cash-flows (1,1)-n= 60.857 KDH

Profitability index = 1 + (60.857/28.882) = 3.11

3. Loan amortization plans:

Bank loan

Year C.D.P Interests Amortization Annuity C.F.P

1 5 000,00 550,00 — 550.00 5,000.00
2 5,000.00 550,00 1 2 0.00 1 800,00 3 750,00
3 3,750.00 412.50 1,250.00 1 662,50 2,500.00
4 2,500.00 275,00 1,250.00 1,525.00 1,250.00
5 1 250,00 137.50 1 250,00 1 387,50 0.00

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 48 of 88
 Loan from the parent company

Year C.D.P Interests Depreciation Annuity C.F.P

1 7 500,00 750.00 1 500,00 2,250.00 6,000.00
2 6 000,00 600.00 1 500,00 2,100.00 4,500.00
3 4 500,00 450,00 1,500.00 1 950,00 3,000.00
4 3,000.00 300.00 1,500.00 1 800,00 1,500.00
5 1 500,00 150.00 1,500.00 1 650,00 0.00
4. The cash flows after financing:

A1 A2 A3 A4 A5
Operating result 8 375,00 26 355,00 26 355,00 26 355,00 26,355.00
Depreciation allowances
+ 250.00 250.00 250.00 250,00 -250,00
Furniture
Interest on bank loan 550,00 550.00 412.50 275,00 137.50
Interest on parent company loan 750.00 600.00 450,00 300.00 150.00
Lease payment 750,00 750.00 750,00 750,00 —
Depreciation Allocations Fixed Assets
- — — — — 500.00
Bought back
Current result before tax 6,575.00 24 705,00 24 992,50 25,280.00 25,817.50
IS 30% 1 972,50 7,411.50 7,497.75 7 584,00 7,745.25
Result after FF and IS 4,602.50 17,293.50 17 494,75 17 696,00 18,072.25
Amortization allowances 5,625.00 5 625,00 5 625,00 5 625,00 6,125.00
Cash flows after FF and IS 10 227,50 22 918,50 23 119.75 23,321.00 24 197.25

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 49 of 88
 Project financing plan:
A1 A2 A3 A4 A5
I–Resources 22,727.50 22,918.50 23 119.75 23,696.00 24,197.25
C.F after F.F and I.S 10 227,50 22 918,50 23 119.75 23,321.00 24 197.25
Transfer of fixed assets — — — — —
Investment subsidies — — — — —
Increase in capital — — — — —
New loan
Banking 5 000,00
Head office 7 500,00
Recovery of security deposit 375.00
II–Jobs 22,625.00 4 750,00 4 750,00 5 250,00 4 750,00
Dividends — — — — —
Acquisition of fixed assets
Constructions 15,000.00
ITMO 3,750.00
Security deposit (lease credit) 375,00
Bank loan repayment — 1,250.00 1,250.00 1 250,00 1,250.00
Repayment of mother house loan 1 500,00 1,500.00 1 500,00 1 500,00 1,500.00
Redemption of furnishings 500,00
Renewal 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
∆ BFR — — — — —
Cash Balance (R-E) 102.50 18,168.50 18 369,75 18 446,00 19 447,25
Cumulative sales 1 2.50 18 271,00 36 640,75 55,086.75 74 534,00

Targeted objectives: Investment selection criteria (Cash flows – NPV – IRR)

Estimated duration: 120 minutes
Procedure of TP6: Individual work
Statement:

As part of its development strategy, the company Art vert, specialized in manufacturing and
commercialization of gardening and decoration products, considering undertaking a program
investment that should allow it to cover a significant share of the local market, deemed to be booming
expansion.
The project involves the establishment of a significant plantation in the Marrakech region and would involve
the acquisition of the following assets:
6
An agricultural land costing 2000 KDH;
Various equipment with a cost estimated at 30,000 MAD, depreciated over 10 years;
Rolling stock worth 3500 KDH, depreciable over 5 years;
Special constructions and developments (wells, pipelines, ...) valued at 4000 KDH and
amortizable over 10 years.
Note: Expenses related to land and constructions and developments will be incurred at the beginning.
from the year 2006 while those related to equipment and rolling stock will be done at the beginning of 2007,
date from which the exploitation of the projected investment should begin.
The technical-economic study provided information on the operating conditions of
project, of which an excerpt is provided below:

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 50 of 88
 The annual working capital requirements attributable to the project is estimated at 72 days of net sales.
The launch of the investment would generate a net turnover of 36,000 KDH. Furthermore, it is estimated that its...
annual growth rate of 20% during the following years;
In addition to the depreciation allocations for the project's fixed assets, the structural costs
include overhead costs estimated at 5000 KDH;
Annual variable costs are estimated at 25% of the net sales.
The project's operation is planned for 5 years at the end of which an exit value is estimated to be
average between the capitalized value over 5 years of the cash flow of the 5th year (2011) and the sum of the price of
transfer of project assets, amounting to 24000 KDH and the recovery of the project's working capital.
The capitalization rate will be approximated by the discount rate plus 200 basis points;
Regarding the project's discount rate, we should retain the company's cost of capital as it is.
extract the following information:
The recommended equity/debt (C/D) ratio by management as part of the definition
an optimal financial structure is 50%;
The average interest rate granted to the company on its financial debt is estimated at 12% (before
IS) ;
-Shareholders typically require a minimum return rate of 14%. However, they...
estimate that the upcoming economic situation is hardly visible and that the planned investment
carries a significant risk. Thus, they require an additional premium of 3.5%.
Other information:
The company is subject to corporate tax at a rate of 30%;
The depreciation of fixed assets will be recognized from the date they are put into service;
1 basis point corresponds to 0.01%.
WORK TO DO
1. Calculate the discount rate (the cost of capital).
2. Calculate the investment expenditure.
3. Calculate the net cash flows and the residual value of the project.
4. Evaluate the economic profitability of the project.

Correction of TP6:

The cost of capital (k):

On a :
kShareholders' Equity 14% + 3.5% = 17.5%
kDebts= 12% x (1-0.30) = 8.4%

C
= 50% or Financial Structure = Equity + Debt
D

C = 1/3 S.F
So S.F = C + 2C
D = 2/3 S.F

1 2
k = (17.5% x) + (8.4% x) Discount rate (k) = 11.3%
3 3

CDC Tertiary Manuel TP: management control 2: Budget management & TB Page 51 of 88
 2. Calculation of invested capital (Investment Expenditure):

Elements of D.I 2006 2007 2008 2009 2010 2011

Terrains 2 000,00
Construction and development 4,000.00
+ Equipements — 30 000,00
Rolling stock — 3 500,00
+ Additional B.F.R * — 7 200,00 1 440,00 1 728,00 2 073,60 2,488.32
Total expenditure 6 000,00 40 700,00 1 440,00 1 728,00 2 073,60 2,488.32
0 -1 -2 -3 -4 -5
x Discounting Coefficient (1,1143) (1,1143) (1,1143) (1,1143) (1,143) (1,1143)
Investment Expenditure 6 000,00 36 525,17 1 159,73 1,248.93 1 344,98 1,448.42
Investment Expenditures 47,727.24 KDH

* BFR = 72j C.A H T BFR = BFR j C.A H T x (C.A H.T/360)

BFR07= (36000/360) x72 = 7200

Note: The working capital requirement varies proportionally to the turnover (excluding tax).
BFR08= 7200 x 1.2 = 1440
BFR09= 1440 x 1.2 = 1728
BFR10= 1728 x 1.2 = 2073.6
BFR11= 2073,6 x 1,2 = 2488,32

3. Calculation of the project's net cash flows:

Forecast Operating Account 2007 2008 2009 2010 2011

C.A H.T 36,000.00 43,200.00 51,840.00 62 208,00 74 649,60
Charges variables 9,000.00 10,800.00 12,960.00 15,552.00 18 662,40
Fixed charges 5,000.00 5,000.00 5,000.00 5,000.00 5 000,00
Depreciation allowances 4 100.00 4 100,00 4,100.00 4,100.00 4 100.00
Result before tax 17 900,00 23,300.00 29 780,00 37 556,00 46,887.20
I.S (30%) 5 370,00 6 990,00 8 934,00 11,266.80 14,066.16
Net result 12 530,00 16 310,00 20,846.00 26,289.20 32,821.04
+ Depreciation allowances 4,100.00 4 100,00 4 100.00 4 100.00 4,100.00
Cash-flows Nets 16,630.00 20 410,00 24 946,00 30,389.20 36,921.04

Residual Value 53,379.36

Allocations to depreciation:
Construction = 4.000 / 10 = 400
Equipements = 30.000 / 10 = 3.000 ∑ = 4.100
Rolling stock = 3.500 / 5 = 700

The residual value:

C. F ×(1 + c)5(Sale price ex. VAT + Working Capital Requirement)
V. R =
2

Cash-flows x (1 + 0.1343)569,328.48
Net transfer price - Income tax on ±Values Or ±Values = Purchase Cost - Net Book Value
V.N.A = V.O - ∑ Amortizations

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 52 of 88
 -V.N.A Terrain = 2.000
-V.N.A Equipement = 30.000 - 15.000 = 15.000
V.N.A Constructions = 4,000 - 2,000 = ∑V.N.A
2,000 = 19.000
V.N.A Rolling stock = 3,500 - 3,500 = 0

±Values = 24.000 - 19.000 = 5.000

I.S on ±Values = 5000 x 30% = 1,500
Net selling price excluding tax = 24,000 - 1,500 = 22,500
P.C nets + BFR recovered (∑ BFR) = 22,500 + 14,929.92 = 37,429.92

Residual value = (69,328.48 + 37,429.92) / 2 = 53,379.36 KDH

4. Calculation of profitability criteria:

V.A.N = -D.I + ∑ Cash-Flows x (1 + k)-t

2007 2008 2009 2010 2011 TOTAL

Cash-flows 16 630,00 20 410,00 24 946,00 30 389,20 * 90 300,39
Discount rate 1,143-2(1,1143)-3(1,1143)-4(1,1143)-5 (1,1143)-6
Updated C.F 13 393,31 14 751,51 16 180,52 17 689,22 47 171,19 109 185,75
* 90.300,39 = C.F11+ V.R = 36.921,04 + 53.379,36

N.P.V = -47,727.22 + 109,185.73 = 61,458.51 KDH

IRR Reminder: Minimum return rate of an investment project, it corresponds to the discount rate.
which gives the equivalence between investment expenditure and the sum of the discounted Cash Flows at the WACC.

TIR = x tq VAN (x) = 0 -47.727,22 + 16.630(1+x)-2+20.410(1+x)-3+...+90,300.39(1+x)-6= 0

Solution by trial and error successive attempts

1st iteration: x = 30% VAN = 7.030 KDH

2nd iteration: x = 35% VAN = -1.102 KDH

So 30% < TIR < 35%

7030 0 -1102

Linear interpolation:

(TIR - 0.3)/ (0.35 - 0.3) = (0–7030)/ (-1102–7030) TIR = 34,3%

Target objectives: Investment selection criteria (Cash flows - NPV - IRR)

Estimated duration: 120 minutes
Progress of TP7: Individual work
Statement:

Optimal is a company specialized in the manufacturing of optical lenses. The executives have defined a focus.
internal growth strategy. They are indeed considering an investment project that should allow for
7 to strengthen their company's market share and improve its competitiveness, particularly in the face of competition
increasingly notorious in the informal sector.

It is indeed about setting up a new production unit that will be operational from the beginning.
N+1 and which would allow to meet the demand in two distinct markets: optical glasses and lenses.
of contact.
The studies conducted by the technical management have highlighted elements for evaluating expenses.
investment and the flows that would be induced by the realization of the project.

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 53 of 88
 These are provided in the appendices below. However, management is questioning the feasibility of this.
investment.

Annex 1 - details of investments in (KDH):

Purchase cost Duration Mode Date of Value

Designation
(V.E) depreciation depreciation realization terminal
Terrain
10,000 - - 1-1-N VE x 1.5
Construction
60,000 25 years old Linear 1-1-N VNA x 1.2
n
120,000 10 years Linear 1-1-N+1 VNA
I.T.M.O
Total 190,000

N.B:

The estimate of the terminal value above is made before taking into account the tax impact of
possible profits or losses from the sale.
The retained NPV for constructions and ITMO corresponds to their NPV at the end of the 5th.
year (N+5). This date is considered as the release date of this investment.

Annex 2 - Forecast of products and expenses attributable to the investment:

Elements N+1 N+2 N+3 N+4 N+5

Sales of glasses H.T (in KDH) 35.000 38.000 41,000 45,000 45,000
Sales of pairs of glasses (in quantities) 46,000 90,000 128.000 166.000 182.000
Material consumption and supply (as a % of net sales excluding taxes) 15% 15% 15% 13% 11%
Staff costs (as % of revenue excluding tax) 3% 3% 3% 2% 2%
Fixed charges excluding depreciation (in KDH) 1200 1300 1500 1500 1500

Annex 3 - miscellaneous information:

The implementation of the proposed project would require the commitment of working capital at the beginning of each year.
estimated at 72 days of net sales; it should be noted that this estimate is exclusively attributable to the project.
The financial structure recommended by the company consists of 35% equity and
financial debts for the rest.
The shareholders of the company usually require a return rate of 12%. However, they
estimate that the planned project carries a relatively high risk. Therefore, they
recommend an additional bonus of 3%.
The average pre-tax cost of financing debt is estimated at 13.61%.
The company's management suggests using the cost of capital as the discount rate for cash flows.
induced by the project.
The estimated selling price of a pair of lenses is 200 DH (excluding tax).
The residual value of the project should include the terminal values of the fixed assets (see.
Annex 1) to which the realization of the working capital requirements would be added.

The depreciation of fixed assets will be recognized starting from their date of commissioning.
The company is subject to corporate tax at a rate of 35%.

WORK TO BE DONE

Determine the cost of capital of Optimal company.

2. Calculate the capital to invest in the project.
3. Determine the cash flows attributable to the project's operation (CF and PV).
4. Evaluate the profitability of the project using the criteria of NPV and IRR.

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 54 out of 88
 Correction of TP7:

Discount rate (k):

Equity Debts
Cost of capital = k Capital Clean × + k Debts ×
C. P + D C. P + D

= 0.15× 0.35 + 0.1361× 1 − 0.35 × 0.65 = %

2. Calculation of investment expenditure:

Calculation of working capital requirement

N+1 N+2 N+3 N 4 N+5

C.A H.T 44 200 56,000 66 600 78 200 81 400
B.F.R 8,840 11,200 13 320 15,640 16 280

N N+1 N+2 N+3 N+4 N+5

Terrain 0 000
Constructions 60,000
Technical Installations & Maintenance Operations — 120 000 — — — —
∆ BFR — 8,840 2 360 2 120 2 320 640
∑ investment expenses 70,000 128 840 2 360 2120 2,320 640
) -0 -1 -2 -3 -4
Discount factor (1,11 (1,11 (1,11) (1,11) (1,11) (1,11)-5
Updated D.I 70,000 116 072,07 1 915,43 1 550,13 1,528.26 379,81
Investment Expenditures 191 445,69 KDH

3. Calculation of cash flows and the residual value:

N+1 N+2 N+3 N+4 N+5
C.A H.T 44,200.00 56 000,00 66,600.00 78 200,00 81,400.0
Cons. Materials and supplies 7,072.00 8 400,00 9 990,00 10 166,00 8,954.00
Personnel costs 1,326.00 1,680.00 1,998.00 1,564.00 1,628.00
Fixed charges 1,200.00 1 300,00 1,500.00 1,500.00 1,500.00
Depreciation allowances 14,400.00 14 400,00 14 400,00 14 400,00 14,400.00
Result before tax 20,202.00 30,220.00 38 712,00 50 570,00 54 918,00
Corporate Tax 7,070.70 10 577,00 13,549.20 17 699,50 19,221.30
Net income 13 131,30 19,643.00 25,162.80 32,870.50 35,696.70
Depreciation allowances 14,400.00 14,400.00 14 400,00 14,400.00 14,400.00
Net Cash Flows 27,531.30 34 043,00 39,562.80 47,270.50 50,096.70

The Residual Value

VR = PC net of assets + recovery of working capital

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 55 of 88
 Transfer price:

Terrain = 10.000 x 1,5 = 15.000

Constructions = 6.000 - (2.400 x 5) x 1,2 = 57.600 Total Transfer Price = 132,600
ITMO = 12,000 - (12,000 x 5) = 60,000

VAN 10.000 + 48.000 + 60.000 = 118.000

+Value 132.600 - 118.000 = 14.600
I.S on +Value 14.600 x 35% = 5.110
P.C net of the I.S 132.600 - 5.110 = 127.490
Working Capital Recovery Sum Delta BFR = 16.280
= 143.770
The residual value
DH

4. The profitability criteria: NPV and IRR?

VAN = -191.446 + 27.531,30 (1,11)-2+ 34.034 (1.11)-3+ 39.563,80 (1,11)-4+ 47,270.50 (1.11)-5+
193,866.70 (1.11)-6

VAN = 13.554 DH
TIR = 12,6%

Sequence sheet No. 5

Management Control Part II:

Module Hourly mass: 80 h
Budget Management and Dashboard

The general cash budget and the statements of

Sequence No. 5 Expected time: 25 h
forecast summary
Objective of the sequence Establish the general cash budget and the projected summary statements

Partie théorique

Points to address
1 The VAT budget

2 The overhead budget

3 The cash inflow and outflow budgets

4 The general cash budget

5 The projected summary statements

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 56 of 88
 Practical part
TP
Target objectives: Cash budget - Overhead expenses - VAT budget - Cash inflow budgets
and disbursements - projected summary statements
Estimated duration: 120 minutes
TP1 Procedure: Individual Work
Statement:

The chief accountant of the company COFFRES has already drawn up the overall operating budgets for the financial year.
2008.
In order to improve the forecasting management system, the CEO of Coffres Company, in the
as part of a probationary period, provides you with the information communicated below:

Operating operations

Commercial activity

The seasonal coefficients would be as follows:

January to March April to June July to October November and December

0.9 1.4 0.9 0.75

Clients typically pay as follows:

Cash in 30 days in 60 days

25% 50% 25%

Representatives receive a commission of 5% of the net sales in the following month.

1 Expected annual activity: sale of 72,000 ladders at 75 DH excluding tax per unit.

Industrial activity

The company's production activity is regular throughout the year and spans 12 months.
Monthly purchases would amount to 120,000 DH excluding tax.
Payments to suppliers are made at a rate of 40% in cash and the remainder in 60 days.
The remuneration of the personnel would amount to 1,500,000 DH annually and the social charges to 600.
000 DH.
Salaries are paid in the same month and social charges are paid the following month.
All other expenses would amount to 1,362,000 DH annually, including 162,000 DH for depreciation.
The VAT on these fees, not included, of course, in the previous amount, would average
at 10,600 DH per month.
It will be assumed that these charges are paid in cash.

2. Investment operations

The company plans to acquire new production equipment valued at 320,000 DH excluding VAT.
recoverable). This equipment could be delivered in January. The payment terms are:

96,000 DH upon delivery,

Le solde en six versements égaux, tous les mois à partir de février.

3. Financing operations

In early June 2007, the company obtained a medium-term loan of 300,000 DH from its banker.
11% rate repayable in 5 years by constant amortization, on May 31 of each year.
The CEO of Coffres has informed his company that he wishes to be reimbursed for part of the

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 57 of 88
 progress made by him:

-300,000 DH in February,
-200,000 DH in November.

The annual general meeting of shareholders of Coffres takes place every year in March and the
dividend distributions are paid out the following month. As in previous years, we
plans to distribute 60,000 DH in dividends.

Imposition

The amount of the first tax advance for the results of 2008 is 11,500 DH, they will be paid
a few days before the deadline.
All the company's activities are subject to VAT at the standard rate of 20%, according to the regime of
debts, monthly declaration.

Balance as of 31/12/2007

Active Passive

Fixed assets Equity

Tangible assets 1,440,500 Capital 400,000
Reserves 450 660
Current assets Result (2) 94,000
Stocks and ongoing 248 180
Clients and associated accounts (1) 402 640 Financing debts
Securities and investment values 75,000 loans from establishments 300,000
credit
Treasury 242,600 Current liabilities 700,000
Current account advances of the CEO 464 260
Debts of current liabilities (3)

Total 2 408 920 Total 2 408 920

(1) Créances : 301 040 DH à 30 jours et 101 600 DH à 60 jours

(2) Résultat : 60 000 pour distribution
(3) Don't:
Accrued interest not due: 28000
Accounts payable at 30 days: 79000
Supplier debts at 60 days 81000
CNSS : 60000
Etat impôts sur les résultats : 20140
VAT due amount: 29118
Various creditors, commissions to be paid to representatives: 35000

WORK TO BE DONE

1. Establish the cash budget

2. Present the projected CPC
3. Present the forecast balance sheet

CDC Tertiary Manuel TP: management control 2: Budget Management & TB Page 58 of 88
Correction of TP1:

1.

VAT budget:

July August September Report as of 30/09

VAT invoiced on the Balance Sheet 13,000 13 000 - -
Invoiced VAT for the month 24,000 52,000 (3) 35 200 (4) 16 800

VAT R / Charges on the balance sheet - 20,000 36,000 (7) 42 000

Recoverable VAT for the month:
Surcharges 6,000 - - -
On assets 5,000 17,000 - -

VAT Credit Report - - - -

VAT credit - - 800 800
VAT due 26,000 28,000 - -
(1) (144 000 / 1,2) x 0,2
(2) (216,000 + 96,000) / 1.2) x 0.2
(3) (144 000 + 67 200) / 1,2) x 0,2
(4) (100 800 / 1.2) x 0.2
(5) (120 000 / 1,2) x 0,2
((120,000 + 96,000) / 1.2) x 0.2
(7) (96 000 + 78 000 + 78 000) / 1,2 x 0,2

Cash inflow budget:

July August September Balance as of 30/09

Clients and CR 78,000 78 000 - -

Sales of:
July 144,000 216,000 - -
August - 96,000 144,000 -
September - - 67 200 100 800

Total 222,000 390,000 211 200 -

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 59 of 88
Disbursement budget:

July August September Balance as of 30/09

Suppliers and CR 102,000 - - -

Purchases of:
July 120,000 120,000 - -
August - 96,000 96,000 -
September - - 78 000 78,000
VAT due 25,000 26,000 28,000 -
Salaries 22,000 22,000 22,000 -
Social charges 6,000 6,600 6,600 6,600
Other Charges 14,000 14,000 14,000 -
Loan - 52 759,50 - 32,759.50
Acquisition of Furniture 36,000 - - 30,000
Pay your IS - - 40,000 40,000
Total 325,000 337,359.50 284 600 -
At the balance sheet, 80,000 DH corresponds to 2 deposits made, so 1 deposit = 80,000 / 2

Cash budget:

Elements July August September

Initial treasury 120,000.00 17,000.00 69,640.50
Receipts 222,000.00 390 000,00 211 200,00
Disbursements 325,000.00 337 359.50 284,600.00
Final treasury 17,000.00 69 640,50 - 3 759,50

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 60 of 88
 2. CPC as of 30/09/2008:

Charges Amount Products Amount

Purchase 490,000 - Sale 640,000

200,000 + 160,000 + 130,000 1,000 x 200 x (1.5 + 1 + 0.7)

Stock variation 5 000

30,000 - 25,000

Staff remuneration 66,000

22 000 x 3

Social charges 19,800

(22,000 x 3) x 30%

Other Charges 42,000

14 000 x 3
Result 38 800
Interest charges 20,000

Depreciation 36,000

Total 678,800 Total 678 800

3. Balance as of 30/09/2008:

Active Net Passive Amount

Permanent financing
Fixed assets
Share capital
Construction 284,000.00 385,000.00
Legal reserve
Desk Mob & Mat 80,000.00 34,000.00
Result
- 38 800,00
Loan from establishments of
Current assets (3) 167 240.50
credit
Goods 25,000.00
Clients and CR 100 800,00
Current liabilities
Deposit / tax on R. 120,000.00 78,000.00
Suppliers and CR
- State, VAT R / Charges 42,000.00 6,600.00
Social organisms
State, VAT credit 800,00 16,800.00
State, VAT charged
Cash Assets - 3,759.50
Liabilities Treasury
Total 652,600.00 Total 652,600.00
(1) 300 000 - 16 000 (2) 70 000 + 30 000 - 20 000 200,000 - 31,759.50

Target objectives: Cash budget - Overheads - VAT budget - Cash inflow budgets
and disbursements - Forecast summary statements
Estimated duration: 150 minutes
Progress of TP2: Individual work
Statement:
2
The company 'SOUNDOUS' was established as a limited company about ten years ago and has specialized
in the manufacture of work uniforms intended for factory employees and public administrations.

Having experienced considerable growth during the first eight years, it dispensed with accounting.
forecast, but the major difficulties faced by the company in the last two years have ended up

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 61 of 88
convince the leaders of the implementation of a budget management system and a control service
of management and internal auditing.

To overcome the cash flow bottlenecks that nearly shook the company last year, the
management asks you to participate in the preparation of the cash budget for 3thquarter 2000 and of him
establish the C.P.C. and the resulting projected balance sheets.

You have the following information to succeed in your mission:

Balance as of 30-06-2000 (simplified balance)

Tangible fixed assets Social Capital

500,000
Depreciation 1,211,900 Reserves
208,000
Stock : -502 500 Report again debtor
-97 500
20,000 Provisional result of 1ersemester
raw materials (1000 units) 156,900
25,000 2,000
supplies 300,000
231,000 BMCE Loan
finished products (3000 units) 384,000
354,000 Suppliers
Clients 59,000
108,000 VAT charged
Recoverable VAT on expenses 2,750
32,600 State VAT due
State of advances / corporate tax 13 200
50 900 State IR / salaries
Banks 4,550
Social organisms
Total 1 530 900 Total 1,530,900

The analysis of the deadlines of receivables and payables listed on the balance sheet made it possible to create the following table.
:

Elements July August September

Clients 177,000 141,600 35,400
BMCE Loan: contracted on 01/03/2000 at the rate
semi-annual at 5.5% repayable in 8 semesters 1erasemester system
-
constants. constant + VAT
VAT on interest 7%
Suppliers 230 400 153 600 -
VAT due (declaration for the month of June 2000) ? ? ?
State of IR/salaries for June 2000 ? ? ?
Social organisms (charges of CNSS and CIMR /
? ? ?
salaries of June 2000

Note: Respect tax deadlines and those of social charges

The company 'SOUNDUS' is subject to the cash basis for VAT. Purchases of
raw materials, supplies, and sales of finished products are taxed at the normal rate of 20%.

The VAT State account includes the VAT included in the supplier debt listed in the liabilities of the balance sheet at the rate
20% and the VAT included in the debts settled in June 2000 to be recovered in July.

After consulting with the relevant services, the management has established the following forecasts:

1 - production program

It is decided to produce 2500 finished product units regularly per month.

The analytical accounting service has set the standard production cost for one unit of finished product.
as follows:

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 62 of 88
 Elements Amount
Raw materials 2 units at 20 Dh each 40
Supplies 5
Labor including social charges: one hour 30
Amortization of production assets 2
Total 77

2–Purchasing budget

a. Raw materials:

July 6000 units

August 4500 units
September 4500 units
The unit purchase price excluding taxes will remain constant at 2ODHS.

b. Supplies:

August 25,000 Dh excl. VAT

September 15000 Dh excluding tax

3 - Budget for other management expenses

July: 6720 Dh including tax with VAT of 20% and 5778 Dh including tax with VAT of 7%
Août : 8160 Dh TTC dont TVA de 20% et 6206 Dh TTC dont TVA de 7%
Septembre : 8160 Dh TTC dont TVA de 20% et 6206 Dh TTC dont TVA de 7%
Charges not subject to VAT: 13,200 Dirhams per month

4 - Sales Forecasts

July 4500 units

August 3500 units
September 2000 units
The unit selling price is 100 Dh excluding tax.

5 - Planned investment

The company plans to acquire a new production machine in July 2000 at a net price of 200,000.
VAT 20%. The total price will be paid as follows: 80% in cash and 20% in October 2000.
An old fully-depreciated machine will be sold in August for 5000 Dh payable in cash that month.
even, its original value was 150,000 Dh.

6 - Other information

The purchases of raw materials are settled at the rate of: 60% cash, 40% the following month;
the purchases of supplies are paid in cash;
salaries are paid at the end of each month;
Social charges represent 20% of the payroll, they are paid the following month.
payment of salaries;
The other management charges are paid in cash;
Sales are collected at a rate of 50% in cash, 40% the following month, and 10% in the third month.
the amount of corporate tax installments shown as assets represents the first two payments made on
31/03/2000 and 30/06/2000.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 63 of 88
 WORK TO DO

1. Present in tables:
a. The cash inflows budget;
b. The disbursement budget;
c. The VAT budget.
2. Present the cash budget for the 3rd quarter of 2000.
3. Present the projected CPC for the third quarter of 2000.
4. Present the projected balance sheet as of September 30, 2000.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 64 of 88
Correction of TP2:

1.
a. Cash Receipts Budget

Elements July August September Stay

1) Balance sheet receivables: 354,000 177,000 141,600 35 400 -
2) Planned sales
July: 4,500 X 100 X 1.20 = 540,000 270,000 216,000 54,000
August: 3,500 X 100 X 1.20 = 420,000 - 210,000 168,000 42,000
September 2 000 100X 1.20 = 240 000 - 120,000 120,000
3) Transfer of fixed assets
Transfer of a machine 25,000
162,000
TOTAL 447,000 592 600 377 400
clients

b. Table of disbursements

Elements July August September Stay

BMCE Loan (1st Semester)
300 000 x 0,055 = 47 359,20
1 - (1,055)-8
Interest = 300,000 x 5.5% = 16,500
VAT / Interest = 16,500 x 7% = 1,650 49,009.20
Total amount to be paid: 48,514.20
Balance sheet liabilities:
Suppliers of the balance sheet 230,400.00 153,600.00
VAT status of the balance sheet 2,750.00
IR state of the balance sheet 13,200.00
Organismes sociaux du bilan 4 550,00
Production labor:
Salaries: (30 x 2,500)/1.20 = 60,000 62,500.00 62 500,00 62 500,00
Social charges: 60,000 x 25% = 15,000 12,500.00 12,500.00
Planned supplies:
Purchases of raw materials in July: 144000 86,400.00 57 600,00
August MP Purchases: 108,000 64,800.00 43,200.00
September MP Purchases: 108,000 64 800,00 43,200.00
Supplies purchase:
August 30,000 30,000.00 30,000.00
September 18 000
Other charges:
Charges subject to a VAT of 20% 6 720,00 8,160.00 8 160,00
Charges subject to a VAT of 7% 5,778.00 6,206.00 6,206.00
Charges not subject to VAT 13 200,00 13 200,00 13,200.00
Planned investment:
200 000 x 1,20 = 240 000 192,000.00
Corporate tax advances:
3thdeposit to be paid in September:
32 600/2 = 16 300 16,300.00
VAT status (VAT budget) 38,802.00 8,979.00
Total 617 498,00 457,575.20 283 668,00

CDC Tertiary Manual TP: Management Control 2: Budget Management & TB Page 65 of 88
 c. VAT budget

Elements July August September

1- VAT collected billed: (447000 / 1.2) x 20% (592600/1.20) x 20% (377400/1.2) x 20%
74,500.00 94 600,00 62,900.00
II- Recoverable VAT: (192000/1,2) x 20%
1-Recoverable VAT on 32,000.00
immobilization

2- VAT recoverable on expenses: 108000-384000 x20% (323520/1.2) x 20% (314160/1.2) x 20%

• Charges taxed at 20% 1.20

Charges taxed at 7% 44,000.00 53,920.00 (5778/1.07) 52,360.00 (6206/1.07)

x 7% x7%
378,00 406.00

VAT on Interest (10%) 1 650,00

Total recoverable VAT 76 000,00 54,298.00 54 416,00
VAT credit for the period 1 500,00
previous
Balance of the month's declaration:
VAT credit 1 500,00
VAT due 38 802,00 8,484.00
Month of payment of the VAT due 38 802,00
In October: VAT due from the projected balance.

2. General cash budget:

Elements July August September

Total collections 447,000.00 592,600.00 377 400,00
Total disbursements 617 498,00 457,575.20 283 668,00
Difference (Receipts (-) Payments -170,448.00 135 024,80 93,732.00
Initial cash flow at the beginning of the month 50,900.00 - 119,598.00 15 426,80
Final cash balance at the end of the month (-) 119 598,00 15 426.80 109 158.80

Tertiary CDC Management TP: management control 2: Budget management & TB Page 66 of 88
Projected CPC

Sales of finished products 1,000,000.00

Variation in stock of products -192,500.00
Total operating income 807 500,00

Charges :
Purchases of raw materials: (6000 + 4500 + 4500) x 20 = 300,000
Purchases of supplies: 25,000 + 15,000 = 40,000
Variation of raw material stocks: 20,000 - ((1,000 + 15,000 - 15,000) x
20) = 0
Stock of supplies: 25000 - (25000 + 40000 - (5 * 2500
x3))= -2500
Total 337,500 337 500.00
Other management charges:
Personnel costs: 30 x 2,500 units x 3 months 225,000.00
Charges taxed at 20%: (excluding tax) 23,040 / 1.20 19,200.00
Charges taxed at 7%: (excluding tax) 18,190 / 1.07 17 000.00
Untaxed charges 13,200 x .3 39,600.00
Depreciation allowances 15,000.00
Total operating expenses 653,300.00

Operating result 154 200,00

Interest charges (without adjustment) 16 500,00

Financial result (-) 16500.00

Current result 137 700.00

Fixed assets PC 25,000.00

Non-recurring result 25 000,00

Result before tax 162 700.00

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 67 of 88
 Projected balance

Active Amounts Passive Amounts

Tangible fixed assets: Financing
permanent
VB: 1211 900 (-) 150 000 + 1,261,900.00 Share capital 500,000.00
200000
Depreciation: Reserves 208 000.00
502 500 - 150 000+ 15 000 - 367,500.00 Report again (-) 97 500.00
(debtor)
Net worth 894 400.00 Provisional result
Stocks : (anticipated CPC) +
Result
Raw materials 20,000.00 from the starting balance 319 600.00
Supplies 27,500.00 Loans
Finished products 38 500.00300 000 (-) (47 359.2- 269 140.80
16500
Current asset receivables: Current liabilities excluding
Clients 162,000.00 cash: 43,200.00
Recoverable VAT status 37,966.00 Suppliers 27,000.00
(225 360/1.20) x 20% = 37 560 VAT charged status 8,484.00
(6 206 / 1.07) x 7% = 406 (162 000 / 1.2) x 20% 12 500.00
And advances / IS 48,900.00 Social organizations and
IGR on
32 600+ 16300 salaries 48,000.00
Cash - asset 109,158.80 Other creditors
Total 1 338 424,80 1 338 424,80

Comment:

Aside from the month of July, which will result in a cash deficit, the other two months will record some
surpluses.
The result of 3thQuarter N+1 exceeds the results of the two previous quarters by itself.

Target objectives: Cash budget - Overheads - VAT budget - Cash inflow budgets
and disbursements - forecast summary statements
Estimated duration: 120 minutes
Procedure of TP3: Individual work
Statement:

Le responsable financier de l’entreprise «MATROULANT » vous remet les renseignements ci-dessous et vous
request to carry out certain work:

Sales forecasts in quantities

3 Month 1 2 3 4 5 6
Quantities 2,500 2,600 2,800 2900 3,200 2,400
Unit Price Excl. Tax 20 20 20 20 20 20
VAT rate 20%

Payment terms
In cash 40%
30 days 40%
60 days 20%

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 68 of 88
 Forecasts of non-capital purchases in quantities
Month 1 2 3 4 5 6
Quantities 2 100 2,200 3,400 3 100 2800 2,200
Unit Price Excl. Tax 18 18 18 18 18 18
VAT rate 20%

Payment terms
In cash 50%
30 days 30%
60 days 20%

Month 1 2 3 4 5 6
Quantities - - - 1 - -
Unit Price Excl. Tax - - - 80,000 - -
VAT rate - -
WORK TO BE DONE

You are asked to establish:

the budget in volume of cash receipts;
the budget in volume of non-capitalized disbursements (on purchases);
the budget in volume for capital outflows;
the VAT budget;
the cash flow budget.

Correction of TP3:
Cash inflow budget in volume
Month 1 2 3 4 5 6
Receipt excluding tax 40% 20,000(1) 20,800 22,400 23 200 25,600 19,200
Collection excluding tax 40% 20,000 20,800 22,400 23 200 25600
Collection excluding VAT 20% 10,000 10,400 11,200 11,600
Total receipts excl. tax 20,000 (two) 40,800 53 200 56,000 60,000 56 400
VAT 20% 4,000(3) 8 160 10,640 11,200 12,000 11,280
Total collection including all taxes 24 000(4) 48,960 63,840 67,200 72,000 67,680
(1) 20,000 = 2,500 x 20 x 40%
3 (2) 20,000 = 20,000 + 0 + 0
(3) 4,000 = 20,000 x 20%
(4) 24,000 = 20,000 + 4,000

Budget of non-capital disbursements in volume

Month 1 2 3 4 5 6
Withdrawal excl. tax 40% 18 900 19,800 30 600 27,900 25 200 19,800
Disbursement excluding tax 30% 11 340 11,880 18 360 16 740 15 120
Disbursement ex VAT 20% 7,560 7 920 12 240 11,160
Total disbursement excluding tax 18,900 31 140 50,040 54 180 54 180 46,080
VAT 20% 3780 6228 10008 10836 10836 9216
Total disbursement including all taxes 22,680 37 368 60,048 65 016 65,016 55 296

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 69 of 88
 Budget of capital expenditures in volume
Month 1 2 3 4 5 6
Total disbursement excluding tax 0 0 0 80,000 0 0
VAT 20% 0 0 0 16,000 0 0
Total disbursement including taxes 0 0 0 96,000 0 0

VAT budget
Month 1 2 3 4 5 6
VAT on receipts 4 000(1) 8 160 10,640 11 200 12,000 11,280
VAT on fixed asset disbursements 0 0 0 16 000(2) 0 0
VAT on non-capitalized disbursements 3 780(3) 6 228 10,008 10,836 10,836 9 216
VAT Declaration 4 000(4) 4 380(5) 4 412 -14 808 -13 644(6) -13 200
4,000 = copy the amounts from the receipts table
16,000 = copy the amount from the table of capital expenditures
3 780 = copy the amounts from the table of non-capitalized disbursements
(4) 4,000 = 4,000–0 - 0 (the second zero is not from fixed disbursements but from December which
missing as data)
(5) 4 380 = 8 160–0–3780
(6) -13 600 = 12 000–0–10 836 + (-14 808)

Cash budget
Month 1 2 3 4 5 6
Total collection including tax 24,000 48 960 63 840 67,200 72,000 67,680
Total disbursement of fixed assets including tax 96,000
Total disbursement of non-capitalized expenses including tax 22 680 37 368 60,048 65 016 65 016 55 296
VAT declaration 4,000 4,380 4 412
Balance 1320(1) 7 592 -588 -98 228 6,984 12 384
Cumulative balance 1 320 8 912(2) 8 324 -89 904 -82 920 -70 536
(1) 1320 = 24,000 - 0 - 22,680 - 0
(2) 8912 = 1 320 + 7592

Targeted objectives: Cash budget - Overhead costs - VAT budget - Cash inflow budgets
and disbursements - forecast summary statements
Estimated duration: 150 minutes
Proceedings of TP4:
Statement:

The management of an industrial company manufacturing a single product wishes to establish its cash budget for
4 the first half of the fiscal year N+1 and provides you with the following information:

I - The forecasts:

1 - Sales Budget:

In January and February 3,000 articles per month

In March 3,500 articles
In April 4,500 articles

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 70 of 88
 In May and June 5,000 articles per month
Unit selling price: 60 Dh excl. tax
Customers pay as follows:
40% in cash.
40% the month following the sale.
20% in two months.

2 - Budget for raw material supplies:

280,000 Dh excluding tax in January.
315,000 Dh excluding taxes in April.
Raw material purchases are paid 90 days end of month.

3 - Production program:

In January, February, and March 3,500 articles per month

In April, May, and June 4,200 articles per month

4 - Budget for production and distribution costs:

Elements January February Mars April May June Total

Consumption of materials 87 500 87 500 87,500 [105000,105000,105,0,577,500]
External services 23 100 23 100 23 100 23 100 23 100 23 100 138,600
Salaries 35900 35,900 35 900 35,900 35,900 35,900 215 400
Social charges and income tax (On 17,950 17,950 17950 17950 17,950 17950 107,700
salaries) (1)
Amortization of 38,500 38,500 38500 38500 38,500 38,500 231,000
immobilizations: 8 333 8333 16,666
Ancient
News
Total 202 950 202950 202 950 220450 228 783 228 783 228 783
The IR represents 40% of the total amount and the charges of CNSS and other organizations represent 60%.

Payment for external services is made in cash.

Salaries are paid at the end of the month and social charges on the 15th of the following month.

5 - Investment budget:

It is planned to acquire a machine in April for a price of 500,000 Dirhams excl. VAT; the payment and commissioning
will take place at the end of April. The depreciation will be linear over 5 years.

6- The VAT:

For the sake of simplicity, we will retain a rate of 20% on both sales and purchases of materials.
external services and fixed assets. There will be no VAT on the loan interest. The payment of the
VAT due for a month's title is paid on the 26th of the following month.
The company is a monthly declarant following the cash basis regime.

7 - Capital increase:

A capital increase of 80,000 Dh through cash contributions is planned: in March; the release will be
integral.

II- Information from the balance sheet:

1- The loan listed in the liabilities of the balance sheet bears interest at a rate of 7.5%. An annuity (including interest) of: 41,400
The amount will be paid in March. (Loan interest is exempt from VAT).

Tertiary CDC Manual TP: management control 2: Budget management & TB Page 71 of 88
2- Corporate taxes:
The net income for fiscal year N amounted to 45,780 Dh.
The deposits paid during the financial year N amounted to 38,380 Dirhams.
The balance of the corporate tax for the fiscal year N, as well as the first two instalments for the fiscal year N+1, will be paid on their
deadlines for enforceability.

III - Miscellaneous information:

Both raw materials and finished products are valued at the weighted average unit cost.
Planned allocation of the result:
A gross dividend of 15 Dh per share will be distributed in June, the TPA will be paid the following month;
The legal reserve will be endowed with 5% and the rest will be carried forward.

WORK TO BE DONE

1. Present the sales revenue table for the 1stersemester of the year N+1.
2. Present the table of expenses on the purchase of raw materials.
3. Present the VAT budget.
4. Présenter le budget des encaissements.
5. Present the cash budget
6. Present the projected financial statements

Correction of TP4:

Sales budget

Month Sales (excluding tax) J F M A M J Stay

J 180,000 86 400* 86 400** 43
F 180,000 86,400 200*** 43,200
M 210,000 86,400 100 800 50 400
A 270,000 100 800 129,600 129,600 64,800
M 300,000 144,000 144,000 72,000
J 300,000 - 144 000 216,000
Total 1 728 000 86 400 172,800 230 400 273 600 324,000 352,800 288,000
* 3 000 * 60 * 12 * 40%
** 3 000*60 * 1,2 * 40%
*** 3 000 *60 * 1,2 *20%

Supply budget

Achats (HT) J F M A M J Stay

J 280,000 - - - 336,000 -
A 315,000 378000
**
Total 595,000 - _ 336,000 _ 378,000

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 72 of 88
VAT budget

Elements J F M A M J Stay
Invoiced VAT
Clients N 33 320 13,340
Collections 14 400 28,800 38 400 45,600 54 000 58 800 48,000
Total VAT charged 47,720 42 140 38,400 45,600 54,000 58 800 48,000
Deductible VAT
Supplier N 22 560 50,000
Supplies 56,000 63,000
Other external charges 4,620 4,620 4,620 4,620 4620 4,620
Immovable assets 100,000
Total deductible VAT 22 560 54,620 4,620 104 620 60 620 4,620 67 620
VAT Credit 12480 59 020 65,640 11 460 11 460
VAT due 25 160 21,300
VAT disbursement 14 350 25 160 - 21,300 - - -

Cash Receipts Budget

Elements January February Mars April I June Stay

Sales 86,400 172,800 230 400 273 600 324,000 352,800 288,000
Augmentation of 80,000
capital 199,920 80,040
Receivables N
Total 286 320 252 840 310 400 273 600 324,000 352,800 288,000

Disbursement budget

Elements J F M A M J Stay
Supplier N 300,000 - _ _ _ _
Social organisms N 21,000 - - - - -
State IR N 7 180 1 - - - - --
Balance IS N
7,400 21 300
Corporate tax deposits 11 445 336,000 11 445 378,000
VAT due 14350 25 160 27,720
Supplies 35 900
Other external charges 27 720 27,720 27,720 10,770 27,720 27,720 10 770
Salary 35,900 35,900 35,900 7 180 35,900 35,900 7 180
CNSS 10,770 10,770 600,000 10,770 10,770
IR - 7 180 7 180 - 7 180 7 180 -
Fixed assets - - - - -
Refund - - 41 400 - - -
of borrowing - 6750
Dividends 60,750
TPA / dividends - - - -
Total 406 150 106 730 141,815,1,038,870 81,570 153 765

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 73 out of 88
Cash budget

Elements J F VI A M J
I/ Collections 286 320 252 840 36 400 273,600,324,000,352,800

Outflows 406 150 106 730 141 815 1038 870 81 570 153 765

Difference: I - II -119 830 146 110 168 585 -765 270 242 430 199 035

Starting balance 174 140 54 310 200 490 369 005 -396 265 -153 835

Net Treasury End 54 310 200 490 369 005 -396 265 -153 835 45 200
month

Projected CPC
Sale of PF 1,440,000
Variation of stocks of PF = SF - SI 49
(1000 + 24 100) - 24 000 = 1 100 units (a) 432
Operating products 1,390,568
Purchases of raw materials 595,000
Variation in stock of raw materials: (115,000 - (115,000 + 595,000 - 577,500)) (-) 17,500
Other external charges 138,600
Salaries 215 400
Social charges and income tax 107,700
Depreciation (231,000 + 16,666) 247 666
Total operating expenses 1,286,866
Operating result 103 702
Interest charges: 120,000 x 7% - 6,750 = 6,750 + 1,642.5 (b) 3 892,5
Result before tax = Temporary current result 99 809,50

(a) Weighted average cost of finished goods: 55,000 + (202,950 x 3) + (220,450 + (228,783 x 2) = 55.68
1,000 + (3,500 x 3) + (4,200 x 3)
Value of the final stock of products = 100 x 55.68 5,568
(b) Interest of the annuity paid at the end of March: 120,000 x 7.5% = 9,000
Accrued interests from the previous year (shown in the opening balance) (-) 6,750
Interest accrued for the remaining three months (April, May, and June)
87 600 x 7,5% x 3 / 12 +1 642.5
Total 3,892.5

Tertiary CDC Manual TP: management control 2: Budget management & TB Page 74 of 88
 Forecast report
ACTIVE PASSIVE
Fixed assets Permanent financing
Immovables 1,105,000 Share capital 980 000
605 000 + 500 000 Reserves 64 391
Depreciations (-) 587 66660 500 + 77 820x5%
340 000 + 231 000+16 666 Report again 6,429
77,820 - (15 x 4,500) - 3891
Net worth 517 334 Provisional result 99,809.5
Business assets 600,000 loan 87,600
Current assets: Current liabilities:
Raw material stock 5 568 Suppliers 378,000
IF + Purchases - consumption 132 500 Social organizations 10 770
Stock of PF: VAT charged status 48,000
60 000 + (24 100 x 55) - (24000x 55) State IR 7180
Clients 288,000 TPA status / dividends 6,750
Recoverable VAT status 67 629 Accrued interest not yet due to pay 1,462.5
VAT Credit Status 11,460
State advances/IS 22 890
Cash assets:
Bank 45 200
1 690 572 1,690,572

Target objectives: VAT budget

Estimated duration: 105 minutes
Progress of TP5: Individual work
Statement:

The company 'SA BRID' produces and sells a single product subject to the normal VAT rate of 20%, it is
subject to VAT under the cash basis regime and submits its monthly declarations.
To establish the VAT budget for the six months of the N+1 fiscal year, you have the information.
following:

I. Balance as of 31/12/N

Active Amounts Passive Amounts

Immovable Assets (Gross) 2,345,900 Capital 1,000,000

5
Depreciations 476,560 Reserves 1,186,100
Net amounts 1,869,340 Net income for the fiscal year (3) 234.500
Stocks of materials 456,000 Loans (4) 852,000
Product stocks 568,800 Suppliers (5) 249.360
Clients (1) 252,000 VAT charged (6) 42.000
Recoverable VAT status (2) 104.360 VAT due 18.400
Treasury 402.600 Remaining balance of corporate tax (7) 40.740
Social charges and income tax (8) 30,000
Total 3.653.100 Total 3.653.100
receivables collectible in January N+1
(2) VAT includes suppliers in the liabilities of the balance sheet and VAT on expenses paid in December N
A gross dividend of 9 Dh will be granted to shareholders in July N+1, the remainder will be put in reserve.
(4) a loan fraction of 90,000 Dh will be repaid, the accrued interest including taxes will be 56,232 Dh, the total will be
paid in March N+1
The suppliers will all be paid in January N+1.
The VAT charged corresponds to the VAT included in the accounts receivable listed in the asset side of the balance sheet.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 75 of 88
The balance of the corporate tax is payable in March N+1
(8) to be paid in January N+1

II. Sales forecasts

Elements January February Mars April May June

Quantities 3.000 4,000 5,000 5,000 3.800 3,000
Unit price (excl. tax) 200 200 200 200 180 180

Sales will be collected at 40% in the month of delivery and 60% in the following month.

III. Raw material purchasing forecasts

Elements January February Mars April May June

Quantities 12,000 14,000 12,000 12,000 11,000 10,000
Unit price (excl. tax) 50 50 50 50 50 50

The materials are taxed at 20% and will be paid 60% in cash and 40% on credit for one month.

IV. Other scheduled charges paid in cash

Eléments January February Mars April I June

TTC without VAT
117.600 103,200 103.200 110.400 110.400 102,000
20%
Excluding tax
9.576 9.576 9.576 9.576 9.576 9.576
14%
TTC not VAT
3.424 3.424 3.424 3.424 3.424 3.424
7%

V. Planned investment:

The company has scheduled the acquisition of a new production machine in April of year N+1 for an amount
Before tax of 400,000 Dh, VAT of 20%, payment will be made in the same month.

VI. The company plans to take out a loan of 300,000 Dh in April of year N+1.

VII. Personnel charges:

Net salaries to be paid at the end of each month: 120,000 Dh.

Social charges and income tax on salaries: 30,000 Dh to be paid in the following month.

VIII. The company plans to double its capital in February N+1.

500,000 in cash contribution to be fully released in February

500,000 for the incorporation of reserves

WORK TO DO

Present the VAT budget

CDC Tertiary Manuel TP: management control 2: Budget management & TB Page 76 of 88
Correction of TP5:

VAT budget

January February Mars April May June Stay

Invoiced VAT:
VAT / Balance Sheet Receivables 42,000
VAT/ 40% of sales to
64,000 80,000 80,000 54 720 43 200
cash
VAT/60% of credit sales 72,000 96,000 120,000 120,000 82,080 64,800
Total VAT charged 90,000 136 000 176 000 200 000 174 720 125 280
Recoverable VAT:
On real estate 80,000
Surcharges:
VAT on charges paid in
December N 62,800
Purchases of raw materials:

60% in cash 72,000 84,000 72,000 72,000 66,000

- 40% on credit 48 000 56,000 48,000 48,000
Other charges 20% 19600 17 200 17,200 18 400 18,400
Other charges at 14% 1,176 1,176 1,176 1,176 1,176
Other charges at 7% 224 224 224 224 224
Loan interest at 10% 5 112
Previous VAT credit 31,712
Total recoverable VAT 62,800 93,000 150 600 231 712 171 512 133 800
VAT credit 31,712 - 8 520
VAT due 27 200 43,000 25,400 3,208
Disbursement month (a) 18400 27 200 43 000 25,400 3 208
(a) Cette ligne constitue une dépense à reproduire sur le tableau des décaissements qui constituent une
cash budget component.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 77 of 88
 Fiche séquence N°6
Management Control Part II:
Hourly mass: 80
Module
Budget management and Dashboard h

Sequence No. 6 The dashboard Expected time: 8 PM

Objective of the sequence Develop a dashboard

Theoretical part

Points to address
1 Mission of a dashboard

2 Choice of indicators

3 Construction of a dashboard

Practical part
TP
Target objectives: Relevance and choice of indicators for a dashboard
Estimated duration: 105 minutes
Conduct of TP1: Group work
Statement:

Shin-Shan is a chain of Asian fast food restaurants based on the European continent.
The general director wishes to establish a dashboard, which is why he is hiring you.

WORK TO DO

You wish to attend the next meeting to present the performance indicators to him.
seem consistent with the strategy, and this for each of the four axes. Following an unfortunate handling
On your computer, you have lost the link between certain indicators, strategic objectives, and axes.

Establish the affiliation of each objective to its axis and each indicator to the strategic objective.
to which it corresponds in the dashboard
1
Axes
Internal processes
Client
Learning and innovation
Financier

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 78 of 88
 Performance indicators Strategic objectives
RCI Improve customer satisfaction
Number of orders placed Motivated and skilled personnel
Training hours Increase the points of sale
Dominate the fast food segment
Average customer wait time
exotic
Net margin compared to competitors Speed and quality of service to customers
Number of employee promotions Reduce customer waiting time
Number of sales points acquired Increase revenue
Total mystery shopping points Maximize cash flows
Degree of autonomy of the managers of
restaurant
Production level

2. During the presentation of the dashboard, Mr. Place, who is responsible in particular for the spatial arrangement of
restaurants, make the following remark: "We have been asked to constantly improve the layout of
restaurants to have more customers and therefore generate more profit, and this does not appear in your table of
board. This will not encourage restaurant managers to call upon me or to follow my guidelines.
effectively! However, some have already made enormous efforts by increasing the client-table area by the
reorganization of the kitchens.

Make a proposal to address Mr. Place's concern.

3. To face a very significant turnover of staff, it was decided to change the way in which the
staff was paid and how it was managed. The profile of new recruits is changing, with people
to different skills and potentials (including those of leadership and organization). From its engagement, this
staff was to receive training. There have been many changes, as responsibilities have shifted.
accrues for a part of the staff.

Do you think the established dashboard reflects this strategy?

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 79 of 88
 Corrections of TP1:

Question 1.

Strategic Objectives Performance indicators

FINANCIAL AXIS
Increase the revenue
Maximize cash flow RCI
AXE CLIENTS
Increase the speed and quality of service
Average customer waiting time
to the clients
Improve customer satisfaction Total of points "mystery shopping"
Dominate the fast food segment
Net margin compared to competitors
exotic
AXE INTERNAL PROCESSES
Increase the points of sale Number of orders placed
Number of retail outlets acquired
Production level
AXE ORGANIZATIONAL LEARNING
Motivated and skilled personnel Training hours
Degree of autonomy of the managers of
restaurant

Question 2.

It would be necessary to include in the internal processes axis an indicator such as the following ratio: number of m2tables-clients
/ kitchen area (m2).

Question 3.

Yes. It can be observed that in the axis of organizational learning, the dimensions of motivation and
staff skills are reviewed and the performance indicators retained - training hours and
degree of autonomy - are well aligned with the essential dimensions for achieving the objectives defined in the
new strategy.

Target objectives: Mission of a dashboard – Choice of indicators – Construction of a dashboard

Estimated duration: 180 minutes
Course of TP2: Group work
Statement:

Mr. Store is an emigrant, having settled more than twenty-five years ago on the island of Margarita, off the coast of Venezuela. In his
luggage, he took with him the exclusive concession rights of a famous car brand.
European whose reputation is well established worldwide. Crude oil exceeding 50 dollars a barrel,
2 The local market has been experiencing exceptional growth for 18 months with a growth rate of the park.
automobile of 12 %. Mr. Store notes that the brand he represents has not been able to fully benefit from the growth and
that its share of the local market is only 2.5%, while the average is 7% worldwide. The management
The global marketing of the manufacturer, dissatisfied with the services of Mr. Store's dealership, gave him as
The three-year objective is to achieve a market share of 5%, failing which the concession on the island will be withdrawn.

After a thorough analysis of the existing situation, Mr. Store concludes that the strategy
marketing must be radically changed if it wants to achieve the market share target that has been imposed on it. It
note that alongside the objective of revenue growth, correlated to the increase in the share of

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 80 out of 88
market, he must avoid a slippage of the profit margin that he wants to maintain at 12% of the turnover
achieved.

M. Store called upon one of his classmates from the Louvain School of Management, who is pursuing a
brilliant career in marketing consulting. It emerges from his report that a new marketing strategy must
to be adopted, whose salient features are as follows:

Competition must play on selling prices by increasing factory exit prices by a margin of 25%.
whereas, in the past, Mr. Store, like its competitors, took margins of 35%;

In addition to the price dimension, the reception of potential clients, the respect of promised deadlines, and the quality of
Maintenance and repair services were determinants of customer performance that Mr. Store had to.
to improve if he wanted to expand his market share.

Customer loyalty was a key determinant of market share and personalized follow-up of
clients should be organized by contacting them, visiting them, and offering them favorable conditions for
the acquisition of a new vehicle, particularly through a good trade-in price for their current vehicle.

The decrease in margins on new car sales was to be offset by the increase in
margins made on the sale of spare parts.

Following the advice of another former classmate, Mr. Store also decided on a change of the
organizational structure in order to better meet the challenges facing its concession. Five centers of
Responsibility has been established:
A center responsible for the sale of new cars. Six salespeople and one secretary are employed there.
full-time. Selling prices are not the responsibility of the center, but are set by Mr. Store. The
the remuneration of each seller is composed of two parts: a fixed part complemented by a variable remuneration
perceived in the form of commissions per vehicle sold (the commission rate depends on the delivered vehicle).
Each salesperson is allocated an annual budget for marketing and prospecting expenses in the form of
of an envelope that he cannot exceed under penalty of sanctions from management.

To achieve the ambitious market share goal, it is estimated that each salesperson should sell an average of
20 vehicles per month. The maximum discount a seller can offer on the advertised sale price cannot
dépasser 3 %. L'évaluation de la performance des vendeurs est faite en fonction de quatre critères :
achievement of their monthly quota for new car sales;
minimization of marketing expenses incurred during their activity as sellers;
minimization of the total amount of discounts granted;
customer loyalty rate to the brand.

A responsibility center in charge of used cars. The manager of this center intervenes for any
vehicle buyback and negotiate the discount level directly with the client. After negotiating with the
in charge of the repair center for the cost of restoring the vehicle, he sets the resale price of the
car trade-in. The center has a space of 1,200 m2 to store used vehicles awaiting
their resale is the responsibility of organizing it and ensuring its maintenance. The center also employs a salesperson.
where the manager of the center freely sets the terms of remuneration. The center has two objectives:
a financial objective of minimum profitability, measured by an operating gross margin ratio divided by
the turnover
a goal of minimizing the downtime of used cars.

3-A spare parts center. This center is responsible for managing the inventory of parts and accessories.
Selling prices are set mandatory by Mr. Store. The two people employed by this center have
fixed remuneration.

4-A center in charge of repairs. Ten skilled workers work in the repair center under the
under the direction of a workshop manager. A standard time and pricing system is in place: it allows for the valuation of quotes.
for repairs as well for new cars as for used vehicles. Two main objectives
are assigned to the head of the repair center:
respect for the announced repair deadlines to clients and adherence to the standard times specified in the estimate
of repair;

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 81 of 88
 maximum utilization of the existing capacity of the equipment, with a view to recovering quickly
the investment made in acquiring new expensive and extremely
performant.

5-An administration center. A team of five people is in charge of order tracking and management.
financial and accounting, of human resources management, under the direct supervision of Mr. Store. The latter
ensure the interface with the manufacturer for all vehicle orders with the parent company.

WORK TO BE DONE

You are being asked:

1. To define the status of responsibility centers (cost center, investment center...) by providing justification.
your choice;
2. to identify the mission and the variables of action of this center in charge of sales
new cars. Prepare a draft of the monthly dashboard for this center in
specifying the source of the information necessary for calculating the proposed ratios;
3. to select and define the main indicators that should be included in the table
general board of the company; indicate the source of the information necessary for the construction of
these indicators as well as the most suitable frequency for this executive dashboard.

Correction of TP2:

1. Types of responsibility centers.

New car sales center. The authority over resources and the responsibility in terms of objectives to
atteindre du responsable du centre sont caractéristiques d'un centre de chiffre d'affaires. En effet, on peut constater
the following elements:

The manager of the center does not have control over the selling price of new vehicles, which is imposed by the
general direction.
b. The objective of the center is to achieve a sales quota under the constraint of an expense budget.
Commercialization and the minimization of granted discounts. There is therefore no profit objective.
c. There is no control over production costs. The center benefits from an expense budget of
commercialization that he cannot exceed and through which he must maximize the volume of sales.

Used car center. This center serves as a profit center for the following reasons:

a. The center manager sets the selling price of the vehicle, negotiates the purchase price (discount value) of the
used vehicle, negotiate the repair cost with the repair workshop and set it
compensation of the salesperson assigned to their center. They thus have authority in terms of income and
costs.
b. In accordance with the authority he has, he is evaluated based on a profit margin that constitutes the objective.
from the center.

Spare Parts Center. This is a revenue center, as the selling prices are set by Mr.
Store and that the costs are fixed.

Repair workshop center. The responsibilities of the repair workshop correspond to those of a center of
cost. The objectives assigned to the workshop are to meet the promised deadlines and standards, and consequently, to
minimize costs. The existence of standard times and standard prices clearly indicates that the mission of this
the goal is not to generate profit, but rather to control its costs.

Center administration. This is unambiguously a cost center or discretionary spending, that is to say
from a cost center where it is not possible to accurately model the articulation between resources
consumed by the center and the results obtained.

2. Mission, action variables and dashboard of the new car sales center.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 82 of 88
Mission of the center. The mission of the center is to increase the sales of new cars of the brand on the island of
Margarita while not exceeding the marketing budget. The monthly goal to achieve is
120 vehicles per month (20 vehicles for each of the six sellers).

Action variables of the center. The most important action variables, in the sense that they condition the
the achievement of the center's objective includes at least the following:
a. prospecting work of sellers, in order to maximize contacts with potential customers;
b. effectiveness of salespeople, which can be translated by their ability to convert contacts with a clientele
potential in actual sales concluded;
c. efficiency in the use of resources, since sellers are subject to a limit on expenses
commercialization and discounts granted to customers.

Dashboard of the new car sales center. The table below presents an example of a table of
board for the new car sales center. It combines performance indicators that measure achievement
of the objectives and result drivers that relate to the action variables.

Dashboard of the new car sales center

Month Month year
Indicators Completed Objective
previous passed
Turnover
Number of vehicles sold 120
Total discounts / total revenue 3%
Marketing cost / total revenue
Number of prospective clients
Number of clients prospecting / number of cars
sales

Sources of information. Two main sources of information are mobilized:

a. double of the sales invoices issued by the company, which allows to know the total revenue
realized, the number of vehicles sold and the total discounts granted;
b. expense reports issued by sellers to request reimbursement for expenses incurred during the
prospecting and sales;
c. weekly or monthly sales report from sellers, which notably indicates the number of clients
prospected.

3. General company dashboard.

Ideally, the company's overall dashboard should include two types of indicators: some
indicators related to the strategic objective(s) of the company; synthetic indicators of the
performance of the five responsibility centers that allow management to control the achievement
objectives of the different centers of responsibility. The table below presents an example of a dashboard
adapted to the situation.

Executive dashboard.
Month Month year
Indicators Completed Objective
previous passed
Market share 5%
Number of vehicles sold
Total revenue from new car sales
Gross operating margin / turnover of
second-hand sales
Revenue from spare parts and accessories
Global gap repair workshop
Administration cost / total revenue

Tertiary CDC Management TP: management control 2: Budget management & TB Page 83 of 88
 The sources of information are both external and internal to the company: external sources (total number
registrations during the period to calculate market share); internal sources (mainly the tables
from the board of the five centers of responsibility).

The timeline for completion depends on how quickly external information is available. It depends
also of the integrated or non-integrated nature of the company's information system. For example, in a
ERP system, the same information can be used in real time in the management dashboards and
center of responsibility. Given the threat facing the company, under the constraints of timely procurement
For information, it is advised to recommend at least an annual frequency.

Target objectives: Dashboard mission - Indicator selection - Dashboard construction

Estimated duration: 240 minutes
Progression of TP3: Group work
Statement:
The management of the "traditional deli – self-service catering" department

Created in 1983 by Mr. Vander, the supermarket of Langeais, a town of 4,000 inhabitants in Indre-et-Loire, has
transformed over time and brands.

First under the CODEC brand with an area of 990 m², it became Super U following an expansion on the
reserves, then bought back by the Comptoirs modernes in 1990, it remained a STOC brand until 1999. Expanded
until reaching a surface area of 1500 m² with the addition of a gas station in 2000, it operates under the brand.
CHAMPION, supermarket format of the CARREFOUR group. Its current director, Mr. POTIER, has the objective
to evolve its point of sale into a large supermarket of 2,500 m².

Open 7 days a week, the store currently has a workforce of 42 people. Its revenue is
9,000,000 € for an average basket of 30 €.

The store is organized around four activities:

DNP sector (non-perishable goods): grocery, liquids, DPH (Drugstore-Perfume-Hygiene), bazaar and
textile. The manager of this sector is Mr. RIVOIRE;
Gas station Rayon whose manager is Mrs. DIALLO;
Meat and Poultry Department;
3
Fresh Sector: fruits and vegetables, cold cuts, fish, Bread-Croissant-Pastry, self-service fresh products, butter,
eggs, cheeses, traditional delicatessen and self-service catering; ultra-fresh. Mr. LEFORT, manager of
The Fresh sector is also responsible for the Butchery-Poultry department.

You are Mr. LEFORT's assistant and you are particularly in charge of traditional charcuterie.
self-service caterer.

Your role is to develop the "Traditional Charcuterie - Self-Service Caterer" section while ensuring that
achieve the objectives set by your manager.

WORK TO DO

1. Using the data provided in the appendix, present the dashboard for the department for the first
semester 2005.

2. Analyze the content of this dashboard and propose corrective actions.

3. What other indicators could you use to complete the department dashboard?

4. Responsible for the animation and commercial organization of the department, you decide on an action.
promotional on the blood sausage. Determine for each product the necessary increase of
sales to clear the usual overall margin. To do this, you will compare the gross margins.
units obtained during the promotion at gross margins without promotion.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 84 of 88
Annex 1: Distribution of the sales of the "Traditional Charcuterie – Self-service Catering" department

Families of CA completed CA completed

products 1st sem.04 1st sem.05
Hams/shoulders 41,076.20 40,875.10
Salads/cooked dishes 8,713.10 10 819,90
Pâtés/rillettes 19,293.40 18,634.30
Cooked products 23 649,90 22,841
Raw products 11 202,60 10 819,90
Sausages 8,090.80 7 815,30
Sausages/andouillette 12 447,30 8 415,50
TOTAL 124 473,30 120,221.00

Product family Participation in the Board of Directors in Participation in the Board of Directors in

2004 2005
Hams/shoulders 33% 34%
Salads/cooked dishes 7% 9%
Pâtés / rillettes 15.5% 15.5%
Cooked products 19% 19%
Raw products 9% 9%
Sausages/sausage 6.5% 6.5%
Blood sausages/andouillettes 10% 7%

Annex 2: Evolution of net sales and the cost of goods purchased excluding tax – First half of 2004
and 2005
Year 2004 (in €)

Month Purchase cost Objective of C.A. CA completed

goods
January 13,176.10 19 500 19 46, 30
February 11 916,70 18,400 18 534,40
Mars 13,031.20 20,800 20 988,80
April 14 908,50 20,800 21,055.10
May 15,058.00 21,900 21,953.80
J in 15 058,80 23,500 22,473.90

Year 2005 (in €)

Month Purchase cost Objective of C.A. CA completed

goods
January 12 938,00 20,900 18 840
February 11,716.00 19 600 17 853
Mars 15,291.00 20,500 20 100
April 14 056,00 21,900 21 509
May 15,440.0 20,800 21,900
June 12,582.00 23,500 20,019

Tertiary CDC Manuel TP: Management Control 2: Budget Management & TB Page 85 of 88
Annex 3: Information on the promotion operation

Products Unit of Selling price Nature of the Coefficient

sale out of promotion promotion multiplier
usual
Country-style white sausage Piece 1.20 3 for the price of 2 2.10
White sausage with port Piece 2.10 - 10 % 2.90
Old-fashioned blood sausage Piece 1.20 3 for the price of 2 2.20
Raisin sausage Piece 2.40 -15% 2.50
Chestnut sausage Piece 2.60 - 15 % 2.90

Correction of TP3:

Dashboard of the department for the first half of 2005

Turnover

Achievement of sales targets 2005

Month Objective C.A. Cart Ecart % Cumulative Cumul Shopping cart Cart
of C.A. achieved value objective realized cumulative cumulative %
value
January 20,900 18,840 -2 060 -9.86 20,900 18,840 -2 060 -9.86
February 19,600 17,853 -1 747 -8.91 40,500 36,693 -3 807 -9.40
Mars 20 500 20 100 -400 -1.95 61,000 56 793 -4 207 -6.90
April 21,900 21,509 -391 -1.79 82,900 78 302 -4 598 -5,55
May 20,800 21,900 1 100 5.29 103 700 100 202 -3 498 -3.37
June 23,500 20,019 -3 481 -14.81 127 200 120 221 -6 979 -5.49
TOTAL 127 200 120 221 -6 979 -5.49

Evolution of monthly sales figures 2004/2005

Month Revenue generated Revenue generated Evolution

2004 2005 in %

January 19467.3 18,840 -3.22

February 18534.4 17,853 -3.68
Mars 20988,8 20 100 -4.23
April 21055.1 21 509 2.16
May 21953.8 21,900 -0.25
June 22473.9 20,019 -10.92
Total 124473.3 120221 -3.42

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 86 of 88
 Evolution of sales figures by product family first half of 2004/2005

2. Analysis of the department's dashboard

Revenue targets 2005

Overall, the revenue target is not achieved for the semester (excess objective deviation of 5.49%).
Monthly, it is only in the month of May that the target is reached and even exceeded. This analysis is confirmed.
due to the fact that the semi-annual turnover decreased by 3.42%: the monthly revenues of 2005 are in
Regression compared to 2004, except for April which shows an increase and May which is stable.
The month of June is critical: we have both the largest drop in revenue compared to 2004 and the gap on
strongest objective.

Families of CA completed CA completed Gap in Gap in

products 1st sem.04 1st sem.05 value %
Hams/shoulders 41,076.20 40,875.10 -201.10 -0.49
Salads/cooked dishes 8,713.10 10 819,90 2 106,80 24,18
Pâtés/rillettes 19,293.40 18 634,30 -659.10 -3.42
Cooked products 23 649,90 22,841 -808,90 -3.42
Raw products 11 202.60 10,819.90 -382,70 -3.42
Sausages/cured sausages 8,090.80 7 814,40 -276.40 -3.42
Sausages/andouilles 12,447.30 8,415.50 -4,031.80 -32.39
TOTAL 124 473,30 120 220.10 -4 253,20 -3.42
Analysis by product families

The decrease in sales in the department of 3.42% corresponds to the decline in sales figures across all
product families, with the exception of Salads/ready-made dishes, whose very strong growth (+24.18%) cannot
compensate for the decreases made on other products. Indeed, this category represents only a small share of
sales figures of the department (7% in 2004 and 9% in 2005).
On the other hand, the sausages/andouillette that saw their contribution to the revenue decrease by 3 points (it
decreased from 10% to 7%), experience a dramatic drop in their revenue in 2005 (-32.39% compared to
to 2004).

Note: the commercial margin as presented below does not need to appear in the table of

because it is not significant on its own to assess the profitability of product families.

Month Purchase cost CA realized Marge

merchandise commercial
January 12 938,00 18,840 5,902.00
February 11,716.00 17,853 6,137.00
Mars 15,291.00 20 100 4 809,00
April 14 056,00 21,509 7 453,00
May 15,440.00 21,900 6,460.00
June 12,582.00 20 019 7,437.00

Corrective measures:
Given the available data, most possible measures are of a commercial nature.
- Promotional actions: to boost sales on certain product families (notably the
boudin/andouilletes
Implementation of merchandising actions (highlighting products)
Implementation of loyalty actions

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 87 of 88
 Review and adjust the assortment and prices
Study the environment (competition) and react if necessary.

3. Other indicators to complete the dashboard

- marges par famille de produits : objectifs, marges réelles, évolution

streak
stock shortages
stock rotation on shelf
- indicateurs sociaux: taux d’absentéisme, nombre d’heures de formation, nombre de jours de congés, etc.
- fréquentation : nombre de clients
average basket
etc.

4. Necessary increase in sales to achieve the usual overall margin

Sale Price Coefficient Price Marge Selling price Marge Augmentation

without Purchase multiplier brute with brute sales
promotion without promotion with necessary
promotion promotion

Boudin 1.20 2.1 0.57 0.63 0.80 0.23 2.74

white
peasant
Boudin 2.10 2.9 0.72 1.38 1.89 1.17 1.18
white at
port
blood sausage 1.20 2.2 0.55 0.65 0.80 0.25 2.57
old-fashioned
Blood sausage 2.40 2.5 0.96 1.44 2.04 1.08 1,33
with grapes
black pudding 2.60 2.9 0.90 1.70 2.21 1.31 1.30
aux
chestnuts

Example calculations for the 'Country-style white pudding'.

Purchase price: 1.2/2.1 = 0.57
Gross margin: 1.2 - 0.57 = 0.63
Promotional selling price: 2.4/3=0.80
Margin with promotion: 0.80 - 0.57 = 0.23
Sales increase: 0.63/0.23 = 2.74

Comment:
Promotional sales '3 for the price of 2' require a significant increase in sales to reach the
objectives.
Should we persist or decide on another type of promotion (price reduction)?
Since this is a promotional action aimed at revitalizing the products through innovations, can we
agree to not meet the margin.

Tertiary CDC Manuel TP: management control 2: Budget management & TB Page 88 of 88